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THE  ECONOMIC  UTILIZATION 
OF  HISTORY 


The  Economic  Utilization 
of  History 

and 

Other  Economic  Studies 


By 
HENRY  W.   FARNAM 

Professor  of  Economics,  Yale  University 


New  Haven:  Yale  University  Press 

London:    Henry  Frowde 

Oxford  University  Press 

MCMXni 


Copyright,   1913 
By  Yale  University  Press 


Printed  February,  1913,   1100  copies 


HJB7I 

The   Economic  Utilization  of  History  and 
Other  Economic  Studies 


Chapter  Page 

I.     The   Economic   Utilization   of   His- 
tory .....       1 

II.     Some  Questions  of  Methodology 

III.  Economic    Experimentation   in   the 

United  States    . 

IV.  The  Pathology  of  Progress    . 

V.     Economic  Progress  and  Labor  Legis 
lation         .... 

VI.     Fundamental  Distinctions  in  Labor 
Legislation 

VII.     Purposes  of  Labor  Legislation 

VIII.     Practical  Methods  in  Labor  Legis 
lation        .... 

IX.     Acatallactie    Factors    in    Distribu 
tion  .... 

X.     A  Socialized  Business  Enterprise 

XL     Social  Myopia 

XII.     Signs  of  a  Better  Social  Vision 


18 

34 
58 

68 

82 
94 

104 

122 

138 
165 

187 


tir^f^>^J  r'    ' 


PREFACE 

The  contents  of  this  little  volume  consist 
in  the  main  of  studies  which  have  already 
appeared  in  print.  All  of  them  have,  how- 
ever, been  revised,  and  the  greater  part  of 
the  first  two  chapters  is  new.  Though  the 
studies  have  been  written  for  special  occa- 
sions during  the  past  four  years,  they  all 
represent  one  point  of  view,  and  the  last 
nine  chapters  may  be  considered  an  appli- 
cation in  the  several  fields  of  labor  legisla- 
tion, business  organization,  and  charity,  of 
the  scientific  methods  advocated  in  Chap- 
ters I,  II,  and  III.  In  order  to  bring  out 
better  this  continuity  of  thought  most  of 
the  essays  have  been  subdivided,  and  new 
titles  assigned  to  them. 

Chapters  I,  II,  and  III  contain  the  presi- 
dential address  delivered  in  Washington  in 
1911  at  the  annual  meeting  of  the  Ameri- 
can Economic  Association.  Chapters  IV, 
V,  VI,  VII,  and  VIII  contain  presidential 
addresses  delivered  before  the  American 
Association  for  Labor  Legislation  in  1909, 
1908,  and  1910.  Chapters  IX  and  X  con- 
tain an  article  originally  published  in  the 


PEEFACE 

Yale  Review  for  May,  1909,  while  Chapters 
XI  and  XII  contain  the  address  delivered 
in  the  spring  of  1911  by  the  author  as  presi- 
dent of  the  Connecticut  Conference  of 
Charities  and  Correction.  Acknowledg- 
ment is  hereby  made  of  the  courtesy  of  the 
American  Economic  Association,  of  the 
American  Association  for  Labor  Legisla- 
tion, of  the  Yale  Review,  and  of  the  Con- 
necticut Conference  of  Charities  and  Cor- 
rection for  permission  to  use  the  matter 
already  published  by  them. 

Henry  W.  Farnam. 

Yale  University,  October,  1912. 


THE  ECONOMIC  UTILIZATION 
OF  HISTORY 


CHAPTER  I 

The  Economic  Utilization  of  Histoky 

It  is  a  common,  if  not  a  universal, 
assumption  that  economics  is  at  a  disad- 
vantage as  compared  with  many  of  the 
natural  sciences,  in  that  it  does  not  admit 
of  laboratory  experiments.  There  are  two 
considerations  which  support  this  assump- 
tion. 

In  the  first  place  economics  deals  with 
human  beings  in  their  social  relations.  It 
does  not  even  deal  with  them  as  indi- 
viduals. It  must  therefore  consider  large 
groups,  often  whole  states  or  groups  of 
states.  The  economist  has  neither  the 
power  to  force,  nor  the  wealth  to  pay  for, 
experiments  upon  nations,  and  if  he  had, 
he  would  in  many  cases  be  deterred  by 
moral  scruples  from  attempting  them. 
Such  a  power  might  conceivably  be  exer- 
cised by  some  oriental  despot,  and  such 
persons  have  existed.  Herod,  the  son  of 
Antipater,  e.g.,  if  he  had  been  as  much 
interested  in  sociology  as  he  was  in  poli- 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

tics,  would  have  made  a  good  experimenter, 
since  he  was  not  only  able  but  quite  \villing 
to  put  to  death  all  of  the  children  born 
within  a  certain  time  in  Bethlehem.  Mu- 
hammad, the  son  of  Tughlak,  who  ruled 
Northern  India  from  1325  to  1351,  is  in  the 
same  class.  He  has  been  described  as 
''learned,  merciless,  religious  and  mad." 
He  was  thus  equipped  morally  and  men- 
tally as  well  as  politically  for  trying  social 
experiments  on  a  large  scale.  And  he  did 
so.  For  we  are  told  that  he  "tried  to 
replenish  his  treasury  by  the  simple  expe- 
dient of  coining  brass  in  vast  quantities 
and  ordaining  that  it  should  be  accepted 
as  silver.'"  He  thus  decreed  that  the 
King's  brass  should  be  equal  to  the 
people's  silver,  and  doubtless  introduced 
among  his  people  the  familiar  phenomena 
which  follow  an  inflated  currency. 

But  Herod  and  Muhammad  represent 
past  types.  The  modern  economist,  even 
if  he  were  at  the  same  time  a  great  states- 
man, could  not  deliberately  experiment  on 
a  nation  without  running  the  risk  of  being 
committed  either  to  an  insane  asylum  or  a 

1  The  Imperial  Gazetteer  of  India,  The  Indian  Empire, 
Vol.  II,  1908,  p.  145. 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

jail.  And  yet  the  really  important  thing 
for  the  economist  is  that  experiments  be 
tried,  not  that  he  try  them  himself,  and  in 
view  of  the  great  cost  of  social  laboratory 
work  the  economist  is  really  fortunate  in 
having  experiments  tried  for  him  without 
expense  to  himself  and  without  involving 
him  in  any  legal  or  moral  liability.  He 
cannot,  it  is  true,  like  Herod,  kill  off  the 
babies  for  the  sake  of  watching  the  effect 
upon  population  or  wealth,  but  society 
is  constantly  creating  by  law  conditions 
which  lead  to  the  slaughter  both  of  inno- 
cents and  of  adults,  by  preventable  disease 
and  accident.^  In  many  cases  this  needless 
increase  of  the  death  rate  is  brought  about, 
as  it  was  in  the  time  of  Herod,  because  our 
officeholders  are  more  intent  upon  keeping 
their  jobs  than  upon  earning  their  salaries, 
and  care  more  for  politics  than  for  soci- 
ology. We  have  in  a  republic  no  despot  to 
force  his  brass  into  circulation,  but  what 
no  despot  would  dare  do  to  the  people,  the 
sovereign  people  cheerfully  do  to  them- 
selves. When  our  country  was  divided  by 
a  civil  war,  the  hostile  sections,  though 
bitterly  opposed  to   each  other   in   most 

2  For  illustrations,  see  Chap.  XI,  pp.  168-177. 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

questions,  were  yet  alike  in  that  each 
decreed  to  make  the  government's  paper 
equal  to  the  people's  gold,  and  tried  over 
again  the  experiment  of  an  inflated  cur- 
rency which  had  been  tried  by  Muhammad, 
the  son  of  Tughlak,  and  by  many  others 
after  him. 

Thus  we  not  only  have  experiments  tried 
on  a  large  scale  in  modern  states,  but  it  is 
fair  to  say  that,  the  more  democratic  the 
country,  the  more  ready  on  the  whole  it 
is  to  try  experiments  on  itself.  Indeed, 
economic  experimentation  is  not  only  pos- 
sible, but  it  is  so  common  that  it  is  hardly 
recognized  as  experimentation,  and  the 
superabundant  legislative  activity  of  so 
many  of  our  advanced  and  radical  com- 
monwealths testifies  to  the  mass  of  work 
of  this  kind  which  is  being  performed 
gratuitously  for  the  economist. 

There  is  a  second  argument  against  the 
possibility  of  economic  experimentation, 
which  is  perhaps  more  serious  than  the  one 
which  has  been  considered,  and  it  deserves 
more  detailed  treatment,  since  it  has  had 
the  support  of  eminent  economists  and 
logicians.  We  are  told  that,  even  if  experi- 
ments are  tried  by  modern  governments, 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

they  are  tried  under  such  conditions  as  to 
have  no  scientific  value  and  to  permit  of 
no  convincing  conclusions.  This  was  the 
view  of  John  Stuart  Mill,  at  once  a  great 
logician  and  a  great  economist,  and  it  has 
been  accepted  by  many,  if  not  most,  of  his 
successors.  Mill,  after  enumerating  the 
four  different  methods  of  experimentation 
which  are  possible,  concludes  that  no  one 
of  them  is  adapted  to  the  social  sciences. 
Take,  e.g.,  the  methods  of  differences  and 
of  concomitant  variations.  In  order  to 
apply  the  former  we  must  have  two 
instances  which  tally  in  every  particular 
except  the  one  which  is  the  subject  of 
inquiry.  In  order  to  apply  the  latter  we 
must  have  a  series  of  phenomena  varying 
together.^ 

To  prove  the  inapplicability  of  the 
method  of  differences.  Mill  takes  the  exam- 
ple of  a  protective  tariff  and  shows  that  it 
would  be  quite  impossible  to  find  two 
nations  which  are  exactly  alike  in  every 
respect  excepting  only  in  the  presence  or 
absence  of  such  a  tariff.* 

3  John  Stuart  Mill :   A   System  of  Logic,  9tli  edition^ 
1875,  Vol.  I,  pp.  448-471. 

4  1.  c,  Vol.  II,  p.  472. 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

The  method  of  concomitant  variations  he 
thinks  equally  impossible,  because  every 
attribute  of  the  social  body  is  influenced  by 
innumerable  causes.  Hence  the  changes 
are  the  effects,  not  of  a  single  cause,  but 
of  the  combination  of  many  causes/ 

We  may  concede  the  difficulty  of  apply- 
ing the  method  of  differences  to  test  the 
effect  of  a  protective  tariff  upon  the  gen- 
eral wealth  of  nations,  and  yet  recognize 
the  possibility  of  experiments  if  applied  in 
a  different  way.  It  will  be  noticed  that  the 
question  which  Mill  asks  is  extremely 
vague.  He  inquires  whether  or  not  a  pro- 
tective tariff  is  "favorable  to  national 
riches. ' '  That  very  question  itself  requires 
a  further  explanation.  What  do  we  mean 
by  "national  riches"?  Do  we  take  into 
account  the  mass  of  wealth,  or  also  its  dis- 
tribution, and  if  we  take  account  of  its 
mass  only,  do  we  mean  the  total  mass  or 
the  wealth  per  capita?  We  might  con- 
ceivably have  two  states  each  of  30,000,000 
inhabitants,  with  an  average  wealth  of 
$1,000  per  inhabitant  or  a  total  of  $30,000,- 
000,000.  Let  us  suppose  that  at  the  end  of 
the  experimental  period  one  of  our  states 

6  1.  c,  Vol.  II,  p.  475. 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

has  a  population  of  45,000,000  with  the 
same  per  capita  wealth  as  at  the  beginning, 
or  a  total  of  $45,000,000,000,  while  the 
other  has  the  same  population  as  at  first, 
but  an  average  wealth  of  $1,500  per  capita, 
which  would  give  the  same  total  as  that  of 
the  first  state.  Shall  we  conclude  that  the 
two  states  are  equally  well  off,  or  shall  we 
award  the  prize  to  the  one  which  has  the 
larger  population  and  a  smaller  per  capita 
wealth,  or  to  the  other  one?  Apart  from 
the  vagueness  of  the  question,  it  is  clear 
that  the  tariff  is  only  one  of  the  many 
factors  determining  the  wealth  of  nations, 
and  that,  moreover,  the  effect  of  the  tariff 
in  one  country  must  depend,  not  simply 
upon  factors  affecting  that  country,  but 
also  upon  the  tariff  policy  of  other  coun- 
tries with  which  it  trades.  In  other  words, 
the  example  taken  by  Mill  is  of  such  a  com- 
plicated character,  that  it  could  hardly  be 
solved  by  the  experimental  method  in  one 
of  the  simpler  sciences  permitting  of  a  full 
laboratory  equipment.  In  chemistry,  e.g., 
we  should  have  an  analogous  case,  if  we 
were  to  ask,  whether  oxygen  or  hydrogen 
is  the  more  useful  element  in  the  economy 
of  nature.    In  order  to  apply  the  experi- 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

mental  method  to  economic  questions,  we 
must  apply  it  as  it  has  been  applied  suc- 
cessfully to  the  natural  sciences.  Now  the 
greatest  achievements  in  science  have  been 
attained,  not  by  putting  such  general  ques- 
tions as  that  instanced  by  Mill,  but  by  mak- 
ing the  questions  more  and  more  specific, 
taking  into  account  only  a  limited  number 
of  phenomena  at  a  time. 

The  science  of  medicine  illustrates  in  its 
history  this  tendency  of  scientific  method. 
The  skilled  physician  no  longer  asks  for 
the  general  effect  on  the  total  well-being 
of  the  human  body  of  certain  drugs  or  a 
certain  diet,  but  he  tries  to  isolate  his 
phenomena  and  study  them  in  detail.  For 
example,  people  often  ask  the  questions. 
Is  it  better  to  drink  alcoholic  liquors  or  to 
abstain?  Is  it  better  to  eat  both  meat  and 
vegetables  or  to  chew  vegetables  and 
eschew  meat?  Now  it  is  clear  that  general 
observations  are  not  absolutely  convincing 
on  these  topics.  The  friend  of  alcohol  can 
produce  plenty  of  instances  of  drinkers 
who  have  lived  to  a  hale  and  hearty  old 
age,  and  plenty  of  abstainers  who  have 
died  young.  The  same  can  be  done  with 
regard  to  a  meat  diet.     But  the  physiol- 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

ogist  can  study  the  question  of  alcohol  in 
detail  and,  by  experimentation,  can  ascer- 
tain what  its  effects  are  upon  digestion, 
upon  the  tissues,  etc.,  and  he  can  thus  iso- 
late its  effects  from  the  many  other  effects 
which  go  to  produce  the  total  well-being  of 
the  body.*'  Even  in  the  practice  of  medi- 
cine physicians  are  tending  more  and  more 
to  give  but  a  single  drug  at  a  time,  in  order 
the  better  to  observe  its  effects,  instead  of 
a  combination  of  drugs  compounded  with  a 
view  to  producing  general  results. 

If  the  question  which  the  economist 
desires  to  have  answered  is  properly 
framed,  and  if  he  has  at  his  command 
proper  observations  as  to  results,  then  it 
is  not  necessary  to  postulate  a  number  of 
different  nations  exactly  alike  in  all  par- 
ticulars but  one,  any  more  than  in  studying 
the  effect  of  drugs  upon  human  beings  it 
is  always  necessary  to  have  a  number  of 
patients  exactly  alike.  By  applying  or 
not  appljdng  a  certain  agency  to  the  same 
person,  we  may  often  observe  the  effects 
of  the  policy  with  all  of  the  certainty  which 

6  As  an  example  of  this  method,  see  Physiological 
Aspects  of  the  Liquor  Problem,  2  vols.,  Houghton,  Mifflin 
and  Company,  1903. 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

goes  with  a  laboratory  experiment.  The 
same  is  true  of  nations,  where  most  of  the 
circumstances  may  be  assumed  to  continue 
essentially  the  same  throughout  a  consid- 
erable period,  and  where  allowances  can 
be  made  for  such  changes  in  circumstances 
as  are  inevitable.  Thus,  while  it  may  well 
be  impossible  to  trace  the  effect  of  a  pro- 
tective tariff  upon  the  general  wealth  of 
the  country,  it  is  not  so  difficult  to  trace 
its  effect  on  the  separate  factors  entering 
into  that  wealth,  such  as  the  distribution 
of  wealth  between  different  classes,  the 
prices  of  protected  commodities,  the  con- 
servation of  the  natural  resources  of  the 
country,  the  growth  of  monopoly,  etc. 

Mill's  prepossession  in  favor  of  the 
deductive  method  may  not  unreasonably  be 
attributed  to  the  state  of  the  natural 
sciences  in  his  day.  It  certainly  seemed  at 
that  time  as  if  astronomy,  the  most  ancient 
and  dignified  of  the  sciences,  had  reached 
the  enviable  position  of  commanding  gen- 
eral principles,  which  enabled  it  to  predict 
by  means  of  deduction  what  would  happen 
in  particular  cases.  It  was  not  unnatural 
to  assume  that  the  sister  sciences  would 
in   succession   enjoy   a   similar   authority 

10 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

and  be  able  to  promulgate,  ex  cathedra,  a 
few  general  laws,  from  which  details 
could  be  deduced.  But  the  progress  of 
science  has  taken  a  course  which  could 
hardly  have  been  anticipated.  Astronomy 
itself  has  been  applying  observation  on 
a  scale  which  could  not  have  been  imagined 
fifty  or  sixty  years  ago.  The  use  of 
photography  and  of  the  spectrum  analysis, 
in  such  studies  of  the  composition  of  the 
sun  as  those  which  have  been  made  by 
Dr.  Hale  and  his  colleagues  in  the  Mount 
Wilson  Observatory  of  the  Carnegie  Insti- 
tution of  Washington,  have  opened  up 
entirely  new  fields  of  investigation  and 
have  given  us  facts  of  which  deduction 
would  be  clearly  incapable.  Geology  and 
zoology,  which  were  formerly,  in  the  main, 
sciences  of  observation,  have  become  ex- 
perimental. The  geologist  no  longer  con- 
tents himself  with  observing  the  stratifi- 
cations of  the  earth's  crust,  and  drawing 
conclusions  from  them.  In  the  geophysical 
laboratory  he  actually  fuses  rocks  and 
reproduces  in  his  microcosm  the  process  by 
which  the  earth's  crust  was  formed.  The 
zoologist  is  able,  as  in  the  Laboratory  of 
Experimental  Evolution  of  the  Carnegie 

11 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

Institution,  to  study  the  laws  of  heredity 
under  controlled  conditions. 

Such  changes  as  these  are  doubtless  due 
to  the  fact  that  the  apparatus  of  experi- 
mentation has  attained  a  range  and  perfec- 
tion formerly  unknown.  The  methods  by 
which  the  great  medical  discoveries  of 
recent  years  have  been  made  are  familiar 
illustrations  of  this  progress  in  our 
instruments  of  observation. 

If  economics  is  to  profit  by  the  example 
of  the  natural  sciences,  it  must  take 
account  of  what  they  have  done  since  the 
days  of  John  Stuart  Mill  Instead  of 
treating  deduction  as  its  goal,  it  must 
consider  it  as  its  starting  point.  Deduc- 
tion can  undoubtedly  give  us  certain  gen- 
eral laws  based  upon  our  inner  conscious- 
ness of  motives  and  impulses,  but  these, 
by  their  nature,  must  be  general  and  true 
in  proportion  to  their  vagueness.  The 
next  step  beyond  deduction  must  be 
description  and  observation,  and  this 
phase  has  been  amply  illustrated  by  the 
great  contributions  to  our  monographic 
literature  made  by  the  historical  school 
in  Germany,  and  by  scholars  in  other 
countries    who    have    been   more    or    less 

12 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

inspired  by  it.  Purely  descriptive  work, 
however,  whether  historical  or  statistical, 
is  not  the  goal  of  science.  Our  next  step 
is  to  apply  experimental  methods,  that  is, 
not  merely  to  describe,  but  first  to  analyze, 
and  then  to  apply  such  methods  as  that  of 
concomitant  variations,  and  to  measure 
the  results  as  far  as  they  are  capable  of 
numerical  expression. 

In  claiming  for  economic  phenomena  the 
value  which  we  attach  to  experimentation, 
it  should  be  understood  that  we  are  not 
dealing  with  mere  observation  as  applied 
by  the  geologist,  or  the  astronomer,  or  the 
zoologist.  Most  economic  experiments, 
though  they  may  not  be  made  with  an 
avowed  scientific  purpose,  are  yet  made  on 
the  basis  of  a  definite  theory,  and  the  fact 
that  this  theory  often  enjoys  the  complete 
confidence  of  the  legislator  does  not  alter 
the  fact  that  it  is  in  its  essence  experimen- 
tal, inasmuch  as  its  results  are  prob- 
lematical. The  zoologist,  who  observes 
animals  in  a  state  of  nature,  studies  varia- 
tions which  occur  without  any  reference 
to  any  theory  that  he  may  have  in  his  mind. 
But  in  social  phenomena,  especially  in 
modern     countries,     the     variations     are 

13 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

always  due  to  a  deliberate  purpose,  and 
that  purpose  is  generally  based,  either  con- 
sciously or  unconsciously,  upon  a  certain 
social  or  economic  theory. 

Francis  Place,  e.g.,  thought  that  the 
excesses  of  trade  unions  were  due  to  the 
restrictions  of  the  law  and  that,  if  these 
were  removed,  industrial  peace  would  pre- 
vail. His  agitation  brought  about  the 
repeal  of  the  English  combination  laws  in 
1824,  but  the  great  increase  in  strikes 
and  other  disturbances  which  promptly 
followed,  completely  disproved  his  theory. 

Some  thirty-five  years  ago  many  econo- 
mists thought  that  the  alternating  demand 
for  gold  and  for  silver  which  would  result 
from  international  bimetallism  would  keep 
the  ratio  of  exchange  between  the  two 
metals  constant.  As  the  agreement  neces- 
sary to  such  a  policy  could  not  be  carried 
into  effect,  our  country  endeavored  to 
raise  the  price  of  silver  by  increasing  the 
governmental  demand  for  it,  and  first  the 
Allison  Act  of  1878  and  then  the  Sherman 
Act  of  1890  were  passed  with  this  theory 
in  view.  The  steady  fall  in  the  price  of 
silver,  in  spite  of  that  demand,  went  far 
towards    proving   the   limitations    of   the 

14 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

bimetallic  theory.  The  so-called  "Anti- 
Trust  Law"  of  the  United  States,  which  is 
being  so  much  discussed  at  the  present 
time,  is  based  upon  the  theory,  commonly 
accepted  from  Adam  Smith  down  to  the 
last  quarter  of  the  nineteenth  century,  that 
free  competition  is  the  best  cure  for  the 
abuses  of  trade.  Many  are  now  reaching 
the  conclusion  that  our  experience  with 
that  law  is  showing  up  many  important 
limitations  upon  that  theory. 

Not  only  do  economic  experiments  rest, 
as  a  rule,  upon  some  hypothesis,  but  they 
often  rest  upon  the  theories  of  the  econo- 
mists themselves,  which,  though  they  may 
be  derided  or  ignored  in  the  beginning, 
slowly  filter  from  the  text-books  through 
the  magazines  and  newspapers  into  the 
popular  mind  and  influence  public  opinion, 
at  times,  in  the  next  generation.  The 
economist  has  at  least  one  attribute  of 
divinity  in  that  his  mills,  like  those  of  the 
gods,  grind  slowly.  In  1882  Jevons  wrote : 
"If  it  can  be  shown  by  unquestionable 
statistics  and  unimpeachable  evidence  of 
scientific  men  that  such  working  \vith 
phosphorus  leads  to  a  dreadful  disease, 
easily  preventable  by  a  small  change  of 

15 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

procedure,  then  I  hold  that  the  Legislature 
is  prima  facie  justified  in  obliging  the  man 
to  make  this  small  change.  The  liberty  of 
the  subject  is  only  the  means  towards  an 
end;  it  is  not  itself  the  end."'  But  thirty 
years  elapsed  before  the  Congress  of  the 
United  States  passed  the  phosphorus  bill, 
and  even  then  prominent  members  of  both 
parties  opposed  it,  not  on  practical 
grounds,  but  for  the  purely  abstract, 
pseudo-philosophical  reasons  referred  to 
by  Jevons. 

John  Stuart  Mill  advocated  taxing  the 
unearned  increment  in  the  value  of  land 
as  far  back  as  1848.^  Though  some  Ger- 
man cities  began  to  tax  this  increment  in 
1905,^  and  indeed,  the  same  principle  had 
been  applied  in  the  German  colony  of 
Kiao  Chan  in  1898,  many  of  Mill's  country- 
men appeared  to  be  quite  unconscious  of 
it,  sixty  years  after  he  had  enunciated  it. 
Thus,   when  the  parliamentary  agitation 

7  W.  Stanley  Jevous:  The  State  in  Relation  to  Labour, 
1882,  pp.  12-13. 

8  First  edition  of  Principles  of  Political  Economy,  Vol. 
II,  1848,  p.  3G1. 

9  See  article  by  Robert  C.  Brooks  on  The  German 
Imperial  Tax  on  the  Unearned  Increment,  Quart.  Jour, 
of  Economics,  August,  1911,  pp.  682-709. 

16 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

began  which  led  to  the  enactment  of  the 
law  of  1910,  the  proposition  impinged  upon 
the  Tory  mind  with  the  painful  shock  of  a 
new  idea. 


17 


CHAPTER  II 

Some  Questions  of  Methodology 

These  illustrations  of  some  of  the  topics 
to  which  the  experimental  method  may  be 
applied,  suggest  the  desirability  of  answer- 
ing two  more  general  and  fundamental 
questions  which  lie  at  the  very  basis  of  all 
economic  study.  One  is,  What  is  the 
nature  of  the  material  with  which  the  econ- 
omist has  to  deal?  The  other  is,  What 
kind  of  results  should  he  try  to  obtain? 

As  regards  the  first  question,  we  should 
recognize  that  the  material  is  not  homo- 
geneous. Much  confusion  results  from  a 
failure  to  realize  this  fact.  As  hinted  by 
Professor  von  Schmoller,^  our  material  is 
drawn  from  three  distinct  kingdoms.  First 
of  all,  we  have  the  human  mind  mth  its 
impulses  and  wants.  This  is  the  element 
emphasized  by  the  deductive  school.  Then 
we  have  the  physical  world,  or  what  we  call 
in  general  nature,  that  world  which  we 

1  See  his  article:  Volkswirtschaft,  Volkswirtschafts- 
lehre  und  -methode.  Handworterbuoh  der  Staatswissen- 
schaften,  3d  edition,  1911,  Vol.  VIII,  p.  457. 

18 


SOME  QUESTIONS  OF  METHODOLOGY 

know  by  our  sense  impressions.^  Finally, 
we  have  the  social  organism,  including 
laws,  institutions,  and  customs,  which  we 
may  be  said  to  know  partly  through  our 
inner  consciousness,  inasmuch  as  we  our- 
selves participate  in  the  social  life  about 
us  and  share  the  feelings  of  our  fellow 
men,  and  partly  by  indirect  sense  impres- 
sions derived  often  through  the  medium  of 
writers  of  books,  or  through  oral  tradition. 
In  this  case,  the  minds  of  other  persons 
serve  as  the  medium  through  which  the 
facts  of  the  outside  social  world  reach  us. 
This  combination  of  factors  may  be  illus- 
trated by  almost  any  familiar  economic 
phenomenon,  such  as  a  strike.  In  the  great 
anthracite  coal  strike  of  1902,  the  course 
of  events  was  influenced  not  only  by  the 
simpler  economic  impulses,  such  as  the 
desire  of  the  miners  to  get  as  much  as  pos- 
sible, and  of  the  employers  to  pay  as  little 
as  possible.  It  was  also  conditioned  by 
purely  geological  data,  such  as  the  thick- 
ness and  dip  of  the  seams  of  coal,  which 
determined  different  methods  of  payment 
in    different    parts    of    the    coal    fields. 

2  See    Karl    Pearson :    The    Grammar    of    Science,    3d 
edition,  1911,  Chap.  II. 

19 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

Finally,  it  was  influenced  by  social  institu- 
tions such  as  the  trade  union  with  its  dis- 
cipline and  its  traditions,  by  the  joint  stock 
company  with  its  legal  rights  and  inner 
organization,  by  the  law  of  the  land,  which 
forbade  violence,  by  the  press,  and  by 
the  moral  pressure  of  the  commission 
appointed  by  the  President,  etc. 

Now  it  is  clear  that,  while  economists 
have  to  study  the  resultant  of  a  combina- 
tion of  three  elements,  each  of  them  is  sub- 
ject to  influences  of  its  own.  The  psychical 
element  is  influenced  by  education,  by  reli- 
gion, by  race,  etc.  The  material  world  is 
influenced  by  geological  processes,  by  the 
seasons,  by  the  operation  of  evolutionary 
forces,  etc.  The  social  world  is  influenced 
by  laws,  by  diplomatic  and  military  events, 
in  short,  by  what  we  call  history.  The 
economist  must,  therefore,  look  for  uni- 
formity, not  so  much  in  the  general 
result  as  in  the  individual  elements  which 
enter  in  to  make  that  result.  He  is,  in  a 
sense,  like  the  meteorologist,  who  has  to 
study  that  familiar  but  very  complex 
phenomenon  which  we  call  the  weather. 
This  obviously  depends  upon  a  number  of 
entirely  distinct  things.     It  depends  pri- 

20 


SOME  QUESTIONS  OF  METHODOLOGY 

marily  upon  the  position  of  the  earth  with 
reference  to  the  sun,  but,  beyond  this 
fundamental  astronomical  fact,  we  also 
have  the  complicated  physical  and  chemi- 
cal conditions  on  which  depend  the  density 
of  the  atmosphere,  the  movements  of  the 
air,  the  temperature,  the  currents  of  the 
ocean,  and  other  things.  Now  it  is  futile  to 
expect  to  predict  the  weather  of  any  day 
from  the  weather  of  the  past,  excepting  as 
we  may  indulge  in  such  obvious  prognosti- 
cations as  that  it  will  be  hot  in  summer  and 
cold  in  winter.  But  the  meteorologist 
knows  the  tendency  of  each  of  the  elements 
taken  separately,  and  by  studying  their 
combination  at  a  given  time  he  may  pre- 
dict with  a  fair  degree  of  approximation 
what  the  weather  is  likely  to  be  in  the 
immediate  future. 

What  kind  of  results  are  we  as  scientific 
economists  to  aim  at  in  our  study  of  this 
material?  It  may  be  best  to  approach  this 
subject  by  first  asking  what  we  do  not  aim 
at.  If  economics  is  a  science,  we  are  not 
content  with  mere  description  of  economic 
processes,  however  great  the  utility  of 
description  as  a  preliminary  phase  of  our 
work  may  be.    Nor  can  we  stop  at  the  nar- 

21 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

ration  of  economic  events,  or  at  a  classifi- 
cation of  economic  elements,  or  even  at 
their  statistical  enumeration.  Our  aim  is 
to  obtain  those  generalizations  commonly- 
called  scientific  laws.  According  to  a 
recent  English  writer  on  this  subject,  law 
in  the  scientific  sense  is  a  "description  in 
mental  shorthand  of  as  wide  a  range  as 
possible  of  the  sequences  of  our  sense- 
impressions."^  Practically  the  same  idea 
is  expressed  by  a  recent  German  author 
with  special  reference  to  economics,  when 
he  says,  that  the  task  of  the  economist  is 
"Beschreiben  unseres  Systemes  und  seiner 

Bewegungstendenzen Die  Satze, 

aus  denen  die  Beschreibung  besteht,  nen- 
nen  wir  dann  'okonomische  Gesetze.'  "* 

Both  of  these  authors  imply  that  we  are 
concerned  with  changing,  not  stationary, 
phenomena.  "It  deserves  special  note," 
says  Pearson,  "that  the  sequences  with 
which  we  are  deahng  are  all  reducible  to 
descriptions  of  motion,  or  of  change."^ 
We  must,  therefore,  distinguish  scientific 

3  Karl  Pearson,  1,  c,  Chap.  IV,  p.  112. 
*  J.  Schumpeter:  Das  Wesen  und  der  Hauptinhalt  der 
theoretischen  Nationalokonomie,  1908,  p.  29. 
5  1.  c,  p.  133, 

22 


SOME  QUESTIONS  OF  METHODOLOGY 

laws  from  so-called  statistical  laws,  such 
as  "Engel's  law"  regarding  the  items  of 
expense  in  family  budgets.  These  differ 
from  scientific  laws  in  that  they  record, 
as  far  as  they  really  do  record  the  truth, 
a  state  of  things  and  not  a  sequence." 

We  must  also  distinguish  between  eco- 
nomic laws  and  so-called  historical  laws. 
These,  to  be  sure,  record  changes,  but  they 
deal  with  such  a  complex  mass  of  events 
that  any  exact  duplication  of  them  is  in 
a  high  degree  improbable  and,  indeed,  has 
never  been  experienced.  At  best,  we  may 
postulate  certain  general  and  indefinite 
tendencies  such  as  that  expressed  by 
Aristotle  in  his  famous  cycle  of  govern- 
mental changes.  In  order  to  obtain  scien- 
tific laws,  that  is  to  say,  sequences  which 
shall  have  any  high  degree  of  uniformity, 
we  must  isolate  our  factors  and  consider  by 
themselves  the  sequences  which  apply  to 
each  one.  We  must  thus  eliminate,  either 
by  actual  experiment  or  by  the  application 
of  the  scientific  imagination,  the  many 
other  factors  which,  when  combined,  con- 
stitute the  phenomena  as  they  present 
themselves  to  us  in  real  life. 

6  On  statistical  law  compare  von  Schmoller,  1.  c,  p.  485, 
23 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

The  analysis  of  phenomena  is  particu- 
larly important  in  economics,  on  account 
of  the  difference  in  the  three  principal 
elements  which,  as  explained  above,  enter 
into  our  field  of  study,  and  the  unequal 
part  which  they  play  in  its  different  divi- 
sions. Though  all  three  occur  in  combina- 
tion in  practically  all  of  the  different  topics 
commonly  treated  in  a  text-book  of  eco- 
nomics, it  seems  as  if  the  material  world 
and  its  laws  were  particularly  prominent 
in  the  subject  of  production.  The  law  of 
diminishing  returns,  e.g.,  is  a  factor  of 
nature  rather  than  of  the  mind  of  man.^ 
The  social  element,  on  the  other  hand, 
determines  to  a  large  extent  the  distribu- 
tion of  wealth.  For  instance,  the  legal 
status  of  labor,  the  legal  privileges  of,  or 
restrictions  on,  capital,  the  system  of  land 
tenure,  the  incidence  of  taxation,  etc.,  all 
play  a  prominent  part  in  distribution.  In 
consumption,  finally,  the  will  of  man  seems 
to  be  the  important  factor.  Whether,  e.g., 
a  nation  will  spend  its  surplus  income  on 
liquors  and  tobacco,  or  on  jewelry  and 
fine  clothes,  or  on  houses,  or  on  babies,  will 

7  See  von  Sehmoller,  1.  c,  p.  485. 
24 


SOME  QUESTIONS  OF  METHODOLOGY 

depend  upon  its  psychology,  though  this 
may  be  affected  secondarily  by  environ- 
ment and  social  institutions. 

There  is  ample  opportunity  for  the  appli- 
cation of  the  experimental  method  in 
studying  all  of  these  standard  subjects  in 
economics.  But  there  is  one  topic  to  which 
no  other  method  can  be  successfully 
applied.  I  refer  to  what  we  may  call 
economic  pathology.  This  may  be  defined 
as  a  condition  in  which  organs  are  dis- 
eased, that  is  to  say,  in  which  they  fail  to 
perform  their  normal  functions.  Now  in 
economics  this  may  mean:  (1)  Some  form 
of  human  degeneracy,  which  in  turn  may 
be  either  physical  or  mental.  Examples  of 
the  former  are  disease,  sterility,  physical 
weakness.  Examples  of  the  latter  are 
indolence,  dishonesty,  immorality,  drug 
habits.  (2)  A  pathological  state  of  our 
economic  system  may  result  from  the  defi- 
ciencies of  nature,  such  as  the  exhaustion 
of  the  soil  or  other  natural  resources,  the 
denudation  of  woodlands,  the  lack  of  rain- 
fall. These  are  sometimes  the  results  of 
bad  legal  institutions,  and  therefore  in- 
directly caused  by  man,  but  they  are 
primarily  physical,  and  in  many  cases,  as 

25 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

in  changes  in  humidity,  they  seem  to  be 
attributable  mainly  to  physical  causes. 
(3)  The  disease  may  be  in  the  social 
system.  China,  e.g.,  has  vast  unused 
resources,  and  an  intelligent,  industrious 
population,  but  bad  government  has  re- 
tarded the  utilization  of  its  powers. 

Now  mere  generalization  with  regard  to 
the  economic  man  gives  us  no  help  in  study- 
ing economic  pathology.  AVe  must  get 
our  facts  at  first  hand.  We  cannot  draw 
from  our  inner  consciousness  the  causes 
of  economic  disease,  any  more  than  we  can 
discover  by  metaphysics  the  microbes  that 
infest  the  human  body. 

The  idea  of  economic  experimentation 
is  not  in  itself  new.  Newmarch  referred 
to  it  in  his  address  as  president  of  Section 
F  of  the  British  Association  for  the 
Advancement  of  Science  as  long  ago  as 
1861,^  and  actually  claimed  that  economics 
had  then  reached  the  experimental  stage. 
Jevons,  in  1880,  wrote  an  essay  on  ''Ex- 
perimental   Legislation    and    the    Drink 

8  Journal  of  the  Eoyal  Statistical  Society,  December, 
1861,  pp.  451-467.  See  quotation  from  Newmarch 's 
address,  given  by  Henry  Ludwell  Moore:  Laws  of  Wages, 
1911,  p.  170. 


SOME  QUESTIONS  OF  METHODOLOGY 

Traffic,"  in  which  he  advocated  the  enact- 
ment of  laws  applicable  to  limited  areas 
only  for  the  express  purpose  of  testing 
them.^  Similar  views  were  expressed  by 
Mm  in  his  book  on  ' '  The  State  in  Relation 
to  Labour."  Professor  Ely,  after  quoting 
the  plan  of  Jevons  just  referred  to,  stated 
that  the  German  historical  school ' '  claimed 
that  the  whole  life  of  the  world  had  neces- 
sarily been  a  series  of  grand  economic 
experiments,  which,  having  been  described 
with  more  or  less  accuracy  and  complete- 
ness, it  was  possible  to  examine."^" 

A  decade  later  Keynes  conceded  the  pos- 
sibility in  certain  cases  of  economic  experi- 
mentation;" and  still  more  recently  Pro- 
fessor von  Schmoller,  an  economist  who 
combines  in  a  rare  degree  philosophical 
training,  historical  knowledge,  practical 
experience  in  legislation,  and  familiarity 

9  This  essay  was  originally  printed  in  the  Contem- 
porary Eeview,  for  February,  1880.  It  was  reprinted  in 
Methods  of  Social  Eeform,  1883,  pp.  253-276. 

loEiehard  T.  Ely:  The  Past  and  Present  of  Political 
Economy,  Johns  Hopkins  University  Studies,  Series  2, 
No.  3,  1884,  p.  45. 

11  John  Neville  Keynes:  The  Scope  and  Method  of 
Political  Economy,  2d  edition,  1897,  pp.  188-190,  and 
275-279. 

27 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

wdth  economic  literature,  in  summarizing 
the  latest  conclusions  of  a  long  life, 
has  expressed  his  general  concurrence  in 
these  views  of  Keynes.'^  Nor  is  it  un- 
common in  more  popular  writings  to  find 
legislation  referred  to  as  experimental. 
The  Hon.  Samuel  W.  McCall,  e.g.,  in  a 
recent  article  says  that  the  people  of 
Oregon  "are  heroically  subjecting  them- 
selves to  political  vivisection  in  the  testing 
of  governmental  experiments.'"^ 

We  seem  to  be  confronted  here  with  a 
case  in  which  the  same  word  is  used  by 
different  authors  with  quite  different  con- 
notations. Newmarch,  Jevons,  and  Con- 
gressman McCall  were  apparently  think- 
ing of  experiments  in  social  policy,  more 
particularly  in  certain  forms  of  social 
legislation,  rather  than  experiments  de- 
signed to  test  or  discover  general  economic 
laws,  and  it  is  significant  that  Jevons'  most 
original  contribution  to  economic  science 
lay  in  the  field  of  economic  abstraction. 
The  point  of  view  of  the  early  writers  of 
the  German  historic  school  seems  to  differ 

12  See  article  Volkswirtschaft,  Handworterbuch  der 
Staatswissenschaften,  3d  edition,  Vol.  VIII,  p.  480. 

13  Atlavtic  Monthly,  October,  1911,  p.  459. 

S8 


SOME  QUESTIONS  OF  METHODOLOGY 

even  more  widely  from  that  which  is  pre- 
sented here.  Many  of  them  not  only  did 
not  expect  to  discover  general  economic 
laws  by  the  historical  method,  but  denied 
that  such  laws  existed.  The  aim  of  Knies, 
who  is  commonly  considered  the  founder  of 
this  school,  seems  to  have  been  rather  to 
trace  laws  of  historical  development,  while 
Eoscher,  one  of  its  most  prolific  and  widely 
read  representatives,  used  history  more 
for  the  purpose  of  illustration  than  of 
proof.  It  may  be  said  in  general  that  the 
vast  and  valuable  monographic  literature 
brought  into  existence  during  the  past  half 
century  under  the  stimulus  of  this  school 
of  thought  emphasizes  the  historical  rather 
than  the  theoretical  element.  As  Professor 
Amonn  says : 

Die  methodisch-kritischen  Ansichten  der  his- 
torischen  Schiile  in  bezug  auf  den  logischen 
Charakter  einer  Wissensehaft  von  der  Volks- 
wirtschaft  fiihren  in  ihren  extremen  Formulier- 
ungen  und  deren  letzten  Konsequeuzen  zu  einer 
voUigen  Negation  der  theoretischen  National- 
okonomie  und  zur  Proklamierung  der  Allein- 
bereehtigung  einer  rein  historischen  Betrach- 
tungsweise,  d.  h.  es  wird  geleugnet,  dass  es  ein 
theoretisches  Erkenntnisobjekt  in  bezug  auf  die 
Volkswirtsehaft    iiberhaupt    geben    konne,    und 

29 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

lediglich  ein  solehes  mit  historischem  Charakter 
anerkannt/* 

Similarly  a  recent  French  author,  in 
referring  to  the  publications  of  the  histori- 
cal school,  says : 

Les  institutions  du  moyen  age  et  de  I'anti- 
quite,  les  doctrines  anciennes,  I'histoire  sociale, 
la  statistique,  la  description  de  I'organization 
economique  des  nations  modernes  forment  I'ob- 
jet  essentiel  de  ces  travaux.  L 'economic  politi- 
que est  comme  fondue  ou  noyee  dans  1  'etude  des 
institutions  et  dans  I'histoire  economique.^^ 

Keynes  and  von  Schmoller  seem  to  refer 
to  the  experimental  method  as  a  means  of 
obtaining  scientific  laws  more  in  the  sense 
of  this  essay,  but  to  treat  it  as  on  the  whole 
exceptional  and  limited  in  its  scope. 

Within  recent  years,  however,  not  a  few 
authors  have  begun  to  apply,  each  in  his 
own  field,  the  method  here  advocated. 
Mathematical  processes  and  notation  are 
used  by  many  of  them,  such  as  Professor 
Irving  Fisher,  Professor  H.  L.  Moore,  and 

"Alfred  Amonn:  Objekt  iind  Grundbegriffe  der 
Theoretischen  Nationalokonomie,  Wiener  Staatswissen- 
schaftliehe  Studien,  10  Band,  Erstes  Heft,  IQll,  p.  44. 

15  Charles  Kist  in  Gide  et  Eist:  Histoire  des  doctrines 
econoniiques  depuis  les  Physiocrates  jusqu'^  nos  jours, 
1909,  p.  446. 

80 


SOME  QUESTIONS  OF  METHODOLOGY 

"the  group  of  Italian  economists  referred  to 
by  liim  in  his  Laws  of  Wages. ^^  That 
a  similar  method  may  be  used  without 
mathematical  apparatus  and  in  a  more 
strictly  historical  subject,  is  shown  by  Dr. 
Woods,  who  has  even  invented  the  term 
"historiometry"  to  designate  it.^^  The 
purpose  of  the  present  study  is  to  empha- 
size three  considerations. 

1.  The  need  of  a  systematic  and  con- 
certed extension  of  this  method.  It  in- 
volves collecting  a  large  number  of  data  in 
order  to  distill  from  them  a  few  generali- 
zations. The  individual  investigator  is 
usually  able  to  command  but  a  limited  field, 
and  even  then  is  often  obliged  to  draw  his 
material  from  different  places  and  periods 
with  loss  of  accuracy  in  his  conclusions. 
We  need  more  team  work.  We  need  a 
closer  co-operation  between  the  universi- 
ties, the  governments,  and  the  various  soci- 
eties and  institutions  devoted  to  economic 
research.    In  short,  we  need  the  principles 

16  1.  c,  pp.  173,  174. 

17  See  Frederick  Adams  Woods :  Mental  and  Moral 
Heredity  in  Eoyalty,  1906.  A  New  Name  for  a  New 
Science,  Science,  November  19,  1909;  Historiometry  as 
an  Exact  Science,  Science,  April  19,  1911. 

31 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

of    "scientific    management"    applied    to 
economic  science. 

2.  The  scientific  value  of  historical 
facts,  even  when  they  are  not  expressed 
statistically.  Mathematicians  have  hither- 
to been  the  most  effective  exponents  of  the 
experimental  method,  and  our  ideal  must 
be  to  express  in  numerical  form  the  gen- 
eralizations of  economics,  since  no  "short 
hand,"  to  use  Professor  Pearson's  expres- 
sion, is  so  concise  and  so  precise  as  that  of 
mathematics.  At  the  same  time  it  is  only 
within  a  very  recent  historical  period  that 
we  have  had  any  extensive  body  of  sta- 
tistics to  draw  upon,  and  even  now  it  must 
be  conceded  that  this  handmaiden  of 
science  has  been  known  to  do  her  work  in 
a  slovenly  fashion  and  to  make  a  show  of 
perfection  hardly  warranted  by  the  reality. 
In  undue  reliance  upon  inaccurate  figures 
even  mathematicians  are  tempted  to  push 
the  refinement  of  their  formulae  beyond  the 
accuracy  of  their  data.  We  need  to  bridge 
over  the  gap  between  the  history  of  the 
past  \\dth  its  broad  but  fairly  well-authen- 
ticated facts,  and  the  statistics  of  the 
present  with  their  elaborate  but  often 
confusing  and  misleading  detail. 

32 


SOME  QUESTIONS  OF  METHODOLOGY 

3.  The  importance  of  utilizing  the  great 
amount  of  economic  material  contained  in 
the  history  of  our  own  country.  An 
attempt  will  be  made  in  the  following 
chapter  to  point  out  some  of  the  peculiar 
advantages  afforded  by  the  United  States 
for  this  kind  of  research. 


33 


CHAPTER  III 

Economic  Expebimentation  in  the  United 

States 

One  of  the  most  salient  facts  in  the  early- 
history  of  the  United  States  is  the  great 
importance  of,  and  the  attention  paid  to, 
economic  interests.  Such  interests  are 
potent  in  the  history  of  all  nations,  but  if 
we  compare  our  country  with  Europe  since 
the  Middle  Ages,  we  must  recognize  that 
there  are  two  forces  very  prominent  in 
determining  the  history  of  Europe,  which 
were  absent  from  our  country.  One  is 
dynastic  ambition,  which  could  not  exist  in 
a  country  without  kings  or  princes.  The 
other  is  religious  zeal.  It  is  true  that  the 
desire  to  worship  God  in  their  own  way  led 
the  Pilgrims  first  to  settle  in  New  England, 
but  it  is  fair  to  say  that  we  have  never  had 
in  our  country  those  great  disturbances 
which  have  been  caused  by  the  wars  of  reli- 
gion in  Europe.  Thus  in  the  very  nature 
of  the  case  economic  considerations  were 
predominant. 

84 


EXPERIMENTATION  IN  THE  UNITED  STATES 

Another  factor  entering  into  European 
history,  though  it  has  existed  in  our  coun- 
try, has  also  played  a  much  less  important 
part.  I  refer  to  racial  prejudice.  It  is 
true  that  we  have  not  been  free  from  this 
curse,  but  fortunately  we  have  been  thus 
far  spared  wars  of  races  and  great  racial 
antagonisms,  such  as  are  constantly  aris- 
ing to  pit  the  Teuton  against  the  Latin  or 
the  Slav  or  the  Magyar  in  Europe. 

Economic  forces  have  had  a  wonderfully 
free  play  in  our  country  on  account  of  its 
newness  and  the  consequent  absence  of 
institutions  and  traditions  which  resist  a 
change  in  older  communities.  Hence  if  we 
look  at  many  of  our  early  laws,  such  as  the 
Massachusetts  Body  of  Liberties,  we  shall 
see  that  they  deliberately  adopt  certain 
economic  ideals  which  they  endeavor  to 
make  the  rule  of  conduct  in  the  common- 
wealth. 

In  New  England  generally  feudal  land 
tenures  w^ere  avowedly  discarded  in  favor 
of  the  simpler  freehold.  The  rule  of  pri- 
mogeniture was  abandoned,  and  instead  a 
system  was  adopted  under  which,  in  case 
of  intestacy,  the  land  was  divided  among 
the    children,    the    oldest    in    some    cases 

35 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

merely  having  a  double  portion.  As 
clearly  stated  by  Governor  Talcott,  this 
was  done  in  order  to  encourage  the 
younger  sons  to  stay  upon  the  land  and 
cultivate  it/ 

If  economic  questions  were  prominent  in 
the  settlement  of  our  country,  they  have 
gained  in  prominence  throughout  our  de- 
velopment. Most  of  our  political  questions 
have  turned  upon  economic  interests  or 
economic  ideals.  I  need  but  refer  to  the 
slavery  question  with  its  many  ramifica- 
tions and  complications,  resulting  in  the 
Missouri  Compromise,  the  Fugitive  Slave 
Law,  the  Compromise  of  1850,  and  the  Civil 
War,  or  consider  the  debates  about  the 
United  States  Bank,  the  endless  contro- 
versies about  the  tariff,  the  currency,  the 
public  lands,  and,  more  recently,  regarding 
immigration,  the  organization  of  labor,  and 
the  regulation  of  corporations,  to  show 
what  an  important  part  economic  questions 
have  played  in  our  internal  development. 

Other  countries  have,  it  is  true,  their 
own  economic  problems  which  they  are 
trying  to   solve  by  legislation.     But   the 

1  C.  M.  Andrews :  The  Connecticut  Intestacy  Law,  Yale 
Review,  November,  1894,  p.  268. 

86 


EXPERIMENTATION  IN  THE  UNITED  STATES 

United  States  has  the  transcendent  advan- 
tage as  an  experiment  station  of  being 
composed  of  a  group  of  States,  each  of 
which  legislates  upon  a  very  large  range 
of  topics.  To  a  certain  extent  it  shares 
this  peculiarity  with  other  modern  federal 
states,  whose  constitutions  are  more  or  less 
modelled  upon  ours,  such  as  the  Swiss 
Eepublic,  the  German  Empire,  Canada,  the 
Australian  and  South  African  common- 
wealths. But  we  have  the  advantage  over 
the  British  colonies  of  a  longer  history, 
and  over  the  European  nations  of  fewer 
historical  institutions  and  racial  antago- 
nisms, which  interfere  with  the  strictly 
economic  effects,  while,  as  compared  with 
any  one  of  these  states,  we  have  the  advan- 
tage of  a  larger  number  of  units  and  there- 
fore of  a  broader  application  of  the  method 
of  differences.  Thus  we  have  in  the  frame- 
work of  our  government  the  very  condi- 
tions which  Jevons  would  have  introduced 
into  England,  in  order  to  test  experimen- 
tally the  operation  of  different  kinds  of 
liquor  laws.^  Economically  our  country 
may  be  likened  to  a  hospital  with  fifty 
general  wards,  each  under  separate  medi- 

2  Jevons:  Methods  of  Social  Reform,  p.  265. 
37 


^4r>^.-^/?-.- 


THE  ECONOMIC  UTILIZATION  OE  HISTORY 

cal  direction,  and  a  large  central  ward  for 
certain  selected  cases,  while  a  number  of 
outlying  pavilions  and  annexes  under  still 
different  systems  are  loosely  connected 
with  the  central  institution.  What  an 
opportunity  this  offers  the  economist  who 
mil  carefully  study  the  results  of  the  dif- 
ferent kinds  of  treatment ! 

It  is  not  only  in  official  experimentation 
through  legislation  and  administration 
that  our  country  is  rich.  It  has  also  been 
the  happy  hunting-ground  of  social  Uto- 
pias. In  many  cases  it  has  been  their 
burying-ground  as  well.  Many  of  these 
communities,  such  as  the  Mormons,  the 
Shakers,  the  Perfectionists,  etc.,  have  had 
a  religious  or  moral  ideal.  Others,  like 
Brook  Farm,  New  Harmony,  the  short- 
lived Ruskin  Colony,  the  Fairview  Colony 
of  Single  Taxers,  have  been  based  upon 
social  or  economic  ideals.  Each  of  these 
communities  represents  on  a  small  scale  a 
voluntary  experiment  in  some  department 
of  economics.  The  ease  with  which  such 
Utopias  spring  up  in  our  country  is  illus- 
trated by  the  fact  that  within  two  years  of 
the  publication  of  Looking  Backwards 
more  than  50  Bellamy  Clubs  with  a  mem- 

38 


EXPERIMENTATION  IN  THE  UNITED  STATES 

bership  of  about  3,000  are  said  to  have  been 
established  in  California  alone.^ 

The  organization  of  ideal  communities, 
which  was  so  popular  in  the  first  part  of 
the  nineteenth  century,  seems  to  be  suc- 
ceeded in  the  first  part  of  the  twentieth 
century  by  an  equally  enthusiastic  activity 
in  the  formation  of  societies  designed  to 
promote  some  reform  in  our  public  policy. 
Some  of  them  relate  to  taxation,  some  to 
the  regulation  of  the  liquor  traffic,  some  to 
labor  legislation,  some  to  conservation, 
some  to  land  tenure.  Each  one  is  a  stimu- 
lus, urging  the  legislatures  to  test  by  actual 
experiment  the  ideas  for  which  they  stand. 

Apart  from  the  idealists,  we  have  a 
great  mass  of  experiments  tried  in  the 
self-interest  of  those  who  themselves  are 
engaged  in  production.  Our  business  men 
and  lawyers  have  been  peculiarly  ingenious 
in  evolving  new  forms  of  industrial  organi- 
zation. Our  public  service  corporations 
are  testing  new  methods  of  adjusting  their 
charges,  until  the  study  of  rates  has  become 
almost  a  science  by  itself.* 

3  Ira  B.  Cross:  Co-operation  in  California,  American 
Economic  Beview,  September,  1911,  p.  536. 

4  J.  Maurice  Clark :  Rates  for  Public  Utilities,  Ameri- 
can Economic  Beview,  September,  1911,  pp.  473-487. 

39 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

Likewise  the  wage  receivers  are  trying 
all  kinds  of  methods  of  improving  their 
own  condition.  Every  strike  may  be  said  to 
represent  an  experiment  relating  directly 
to  the  important  question  of  economic 
theory :  what  determines  the  rate  of  wages. 

In  all  of  this  experimentation  we  have 
the  great  advantage  in  our  country  of 
carrying  it  on  under  conditions  described 
by  that  favorite  phrase  of  the  economist, 
''other  things  being  equal."  By  this  I  do 
not  mean  that  we  have  been  able  to  try 
different  things  under  absolutely  identical 
conditions,  such  as  might  be  created  in  a 
laboratory,  but,  as  compared  ^vith  the  con- 
ditions under  which  economic  history  has 
developed  in  other  parts  of  the  world,  we 
may  claim  for  our  own  country  that  these 
experiments  have  been  conducted  under 
three  exceptionally  favorable  conditions : 

1.  They  fall  within  a  limited  period,  so 
that  no  great  or  fundamental  changes  have 
taken  place  in  the  cultural  standards  of 
civilization  or  the  mores  of  the  people 
such  as  characterized  the  change  from  the 
mediaeval  to  the  modern  period  in  Europe. 

2.  The  experiments  have  been  carried 
on  Adthin  an  area  of  political  uniformity, 

40 


EXPERIMENTATION  IN  THE  UNITED  STATES 

SO  that,  although  there  are  great  differ- 
ences in  latitude  and  longitude,  climate  and 
soil,  between  the  different  parts  of  our 
country,  yet  the  general  legal  and  social 
environment  is  very  nearly  the  same. 

3.  These  experiments  have  been  carried 
on  among  a  people,  which,  if  not  homo- 
geneous in  its  ethnic  makeup,  is  at  least 
remarkably  uniform  in  its  heterogeneity. 
Our  country  is  like  a  good  mince  pie ;  any 
one  slice  contains  many  ingredients,  yet 
specimens  from  different  parts  of  the 
whole  are  made  up  of  nearly  the  same  ele- 
ments, varying  mainly  in  their  relative 
prominence.  Thus  every^vhere  we  have 
the  common  basis  of  the  English  language 
and,  with  the  exception  of  Louisiana,  of 
English  law.  Everywhere  too,  we  have  a 
greater  or  less  admixture  of  different 
European  races,  of  Africans,  and  occa- 
sionally of  Mongolians.  While,  of  course, 
the  percentage  of  the  different  races  varies 
widely  in  different  parts  of  the  country,  it 
cannot  be  said  that  any  one  race  except 
the  Anglo-Saxon  exerts  in  any  section  a 
purely  racial  predominance  upon  our 
institutions.^     Even  in  the  South,  in  com- 

5  The  word  Anglo-Saxon  is  to  be  taken  in  its  broadest 
41 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

munities  in  which  the  blacks  outnumber 
the  whites  twenty-seven  to  one,  the  insti- 
tutions are  essentially  Anglo-Saxon  and 
not  African.  While,  therefore,  we  have  not 
the  absolute  control  over  our  conditions 
that  is  enjoyed  by  the  chemist,  and  while 
the  elements  are  vastly  more  complicated 
than  those  entering  into  the  ordinary  labo- 
ratory experiment,  we  have  conditions 
relatively  favorable  for  obtaining  good 
results. 

The  temptation  is  strong  to  enumerate, 
at  least  in  part,  some  of  the  many  fields  of 
economic  experimentation  which  are  to  be 
found  in  the  history  of  the  United  States, 
but  to  do  so  at  length  would  expand  a 
chapter  into  a  monograph  and  is,  there- 
fore, out  of  the  question.  Some  of  these 
departments  of  study,  such  as  those  relat- 
ing to  currency,  to  prices,  to  the  rate  of 
interest,  have  already  yielded  valuable 
results  to  the  investigator.  Some  of  the 
more  practical  questions,  such  as  those 
relating  to  land  tenure  and  the  methods  of 
agriculture,  as  well  as  the  purely  govern- 

sense  to  cover  the  whole  Low  German  stock,  without  any 
reference  to  the  relative  strength  of  the  English  and 
Dutch  element  in  New  England  institutions. 

42 


EXPEEIMENTATION  IN  THE  UNITED  STATES 

mental  questions  involved  in  taxation  and 
the  management  of  public  debt,  still  remain 
to  be  studied  intensively,  in  spite  of  a  con- 
siderable amount  of  work  already  put  upon 
them.  Less,  on  the  whole,  has  been  done 
with  the  problems  relating  to  labor, 
methods  of  remuneration,  the  rates  of 
wages,  the  efficiency  of  labor,  etc.  We  have 
tried  many  experiments  in  this  department 
of  economics.  We  have  had  free  labor, 
indentured  labor,  and  complete  slavery. 
We  have  made  a  sudden  transition  from 
slavery  to  freedom,  so  sudden  as  to  bring 
with  it  many  undesirable  results,  but  per- 
haps for  that  reason  the  more  interesting 
as  an  economic  experiment.  In  the  appli- 
cation of  free  labor  we  have  likewise  had 
experiences  of  great  value.  We  have  had 
labor  both  organized  and  unorganized, 
native-born  and  foreign,  and  we  have  had 
trade  unions  of  many  types  and  represent- 
ing many  stages  of  development.  We  have 
tried  many  systems  of  wages.  We  have 
developed,  particularly  in  the  South,  vari- 
ous methods  of  applying  labor  to  land, 
which  represent  gradations  ranging  from 
free  tenancy  to  a  system  verging  on 
peonage. 

43 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

Though  considerable  attention  has  been 
given  to  this  topic,  many  of  its  compli- 
cated problems  have  been  barely  touched 
upon.  The  economist  often  inquires  about 
the  effect  of  labor  on  production,  but  he 
seldom  asks,  "What  is  the  reaction  of 
wealth  upon  the  efficiency  of  labor  ? ' ' 

According  to  the  observations  made  by 
Mr.  Frederick  W.  Taylor,  it  does  not  pay 
to  increase  wages  too  rapidly.  Indeed,  he 
has  endeavored  to  give  a  mathematical 
expression  to  the  possible  rate  of  economi- 
cal increase  and  says  that,  if  wages  are 
increased  up  to  60  per  cent  beyond  the 
wages  usually  paid,  this  increase  tends  to 
make  the  men  more  thrifty  and  better  in 
every  way,  but  that,  when  the  rate  goes 
beyond  60  per  cent,  many  of  them  tend  to 
work  irregularly  and  to  become  more  or 
less  shiftless,  extravagant,  and  dissipated.® 

Economists  have  done  little  in  the  study 
of  this  phase  of  the  labor  problem,  since 
Ricardo  laid  down  the  pessimistic  view 
that  the  population  tends  to  increase  with 
an  increase  in  wages.  Yet  it  is  a  common- 
place that,   while   an   eflScient  population 

6  See  F.  W.  Taylor :  The  Principles  of  Scientific  Man- 
agement, 1911,  p.  74. 

44 


EXPERIMENTATION  IN  THE  UNITED   STATES 

may  be  seriously  handicapped  by  the 
< '  niggardliness  of  nature, ' '  a  country  with 
large  natural  resources  may  be  likewise 
held  back,  because  the  inhabitants  either 
will  not  or  can  not  utilize  them,  or  because 
they  do  not  apply  sufficient  intelligence  and 
energy  in  international  competition. 

It  is  a  matter  of  common  observation 
that  wealthy  families  in  our  country  often 
contain  a  number  of  parasitic  members, 
that  is,  members  who  derive  a  large  income 
from  society  without  rendering  any  appre- 
ciable economic  or  public  service  in  return. 

Mr.  Andrew  Carnegie  gives  expression 
to  a  common  view  when  he  says :  ' '  There  is 
nothing  so  enervating,  nothing  so  deadly 
in  its  effects  upon  the  qualities  which  lead 
to  the  highest  achievement,  moral  or  intel- 
lectual, as  hereditary  wealth."^  But  we 
have  no  figures  to  tell  us  with  any  accuracy 
how  numerous  these  drones  are,  or  what 
proportion  they  bear  to  the  more  useful 
members  of  the  same  families.  It  seems 
very  probable  that  the  public  have  an 
exaggerated  notion  of  their  vices,  because, 
as  Dr.  Woods  points  out,  ''the  vices  of  the 

7  Andrew  Carnegie:  The  Empire  of  Business,  1902, 
p.  126. 

45 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

aristocracy  are  always  made  the  most  of 
by  the  polychrome  daily  press,"®  and  in 
the  absence  of  an  aristocracy,  multimil- 
lionaires furnish  good  copy.  But  even 
granting  that  we  know  a  little  of  their 
moral  shortcomings,  we  know  practically 
nothing  of  their  economic  efficiency.  Little 
account  is  made  on  the  one  hand  of  the 
many  men  and  women  of  means  who  live 
conscientious,  industrious  lives,  devoting 
themselves  to  some  form  of  production  or 
of  public  service ;  or,  on  the  other  hand,  of 
those  whose  energies  are  dulled  by  the  pos- 
session of  a  competency,  and  who,  "without 
being  actually  vicious,  are  mere  ciphers  as 
far  as  any  economic  usefulness  is  con- 
cerned. Yet  we  ought  to  have  reliable 
facts,  if  we  are  to  judge  correctly  of  the 
reaction  of  prosperity  on  the  human  mind, 
and  of  the  conditions  which  determine  it. 
Intensive  studies  of  heredity  in  families, 
such  as  those  made  by  Sir  Francis  Galton 
in  England  and  Dr.  Frederick  A.  Woods 
and  Dr.  C.  B.  Davenport  in  our  country, 
are  of  great  value,  but  need  to  be  supple- 
mented by  a  study  of  the  economic  re- 
el, c,  p.  261. 

46 


EXPEEIMENTATION  IN  THE  UNITED   STATES 

actions.  In  the  case  of  animal  life,  the 
inherited  characteristics  are  all-important, 
and  the  breeder  can  reasonably  expect  to 
utilize  the  good  qualities  of  the  parent  in 
the  offspring.  But  if  cows  had  the  power 
to  deliberately  choose  a  life  of  celibacy,  we 
should  find  many  a  pedigreed  Guernsey, 
with  ancestors  in  the  advanced  register, 
chewing  her  cud  in  idleness  on  the  hillside 
and  yielding  no  milk  whatsoever,  just  as  we 
often  find  sons  of  distinguished  parents 
displaying  real  ability,  when  put  to  some 
academic  test,  and  yet,  for  lack  of  proper 
incentive,  doing  nothing  to  make  their 
lives  either  useful  or  distinguished. 

Our  country  should  give  exceptional 
facilities  for  studying  parasitism  in  the 
*' leisure  class,"  because  here  wealth  is  not 
subject  to  the  social  pressure  of  the  feudal 
system,  inherited  in  the  older  countries  of 
Europe  from  the  time  when  wealth  meant 
land  ownership,  and  land  ownership  of 
necessity  involved  public  duties.  Many  of 
this  class  walk  our  streets,  eloquent 
but  unconscious  arguments  for  socialism, 
terrible  examples  for  the  moralist,  living 
texts  for  sermons,  rich  material  for  the 
problem  novelist,  but  still  comparatively 

47 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

neglected  by  the  economist,  the  sociologist, 
and  the  statistician.  We  gather  the 
budgets  of  working  men  but  not  of  club 
men;  we  collect  the  statistics  of  involun- 
tary unemplojTnent  but  not  of  voluntary 
idleness ;  our  study  of  social  conditions  on 
the  East  Side  has  not  been  extended  to  the 
West  Side.  Yet  it  is  obviously  of  the  great- 
est importance  to  a  nation,  as  it  is  to  a 
cattle  breeder,  to  reproduce  and  utilize  the 
strong  and  dominant  types,  and  we  must 
know  why  so  many  of  these  members  be- 
come atrophied,  if  we  would  understand 
the  causes  of  national  decadence,  the  great 
and  perennial  question  of  history  as  well 
as  of  practical  politics. 

Parasitism  is,  however,  but  a  part  of  the 
general  subject  of  economic  pathology, 
which  has  been  altogether  too  much  neg- 
lected by  economists  in  the  past.  Or,  if 
we  pass  beyond  the  strictly  economic  ques- 
tions to  those  broader  questions  of  social 
policy,  what  vast  materials  have  we  in  our 
country  bearing  upon  the  mixture  of  races. 
What  a  splendid  opportunity  to  test  the 
theories  of  the  philosophical  anarchist, 
who  holds  that  the  ills  of  society  are  due  to 
the  law,  and  who  may  study  in  the  history 

48 


EXPEKIMENTATION  IN  THE  UNITED  STATES 

of  Alaska  the  effect  of  allowing  a  common- 
wealth to  grow  up  almost  without  law. 

It  is  not  necessary,  in  this  brief  survey 
of  the  opportunities  which  our  country 
offers  for  economic  induction,  to  make  an 
elaborate  enumeration  of  topics  or  to  show 
in  detail  how  the  material  may  be  secured. 
Attention  should,  however,  be  called  in 
fairness  to  some  of  the  defects  in  condi- 
tions which  make  laboratory  methods 
difficult,  and  which  must  be  taken  into 
consideration  before  any  piece  of  work  is 
undertaken. 

In  the  United  States  experimentation  is 
constantly  interrupted  by  the  power  of  our 
courts  to  nullify  laws.  Thus  experiments 
may  be  overthrown  on  grounds  which  are 
quite  extraneous  to  their  essence.  It  is  as 
if  a  biologist  were  to  suddenly  find  his 
laboratory  invaded  and  wrecked  by  an 
over-zealous  anti-vivisectionist. 

The  economist  has  the  further  disadvan- 
tage that  the  subjects  of  his  study  and 
experiment  are  men  like  unto  himself,  with 
opinions,  emotions,  and  voices.  Hence 
every  experiment  is  accompanied  by  a 
babel  of  sound,  which  seems  to  confuse  the 
whole  subject.    The  physiologist,  working 

49 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

in  his  quiet  laboratory,  is  apt  to  think 
the  very  subject-matter  of  economics  ill 
adapted  to  scientific  study.  If  the  human 
body  were  the  seat  of  a  republic  in  which 
all  of  the  microbes  that  infest  it  and  the 
ferments  that  endanger  it  were  vocal,  the 
investigator  would  have  to  put  wax  in  his 
ears  to  keep  his  mind  free  from  disturb- 
ance. Imagine  the  bacilli  of  consumption 
and  of  typhoid  holding  periodical  elections 
to  see  which  should  for  the  next  four  years 
control  the  state  of  health  of  the  patient, 
with  a  lot  of  insurgents  in  the  shape  of 
pyaemia  and  dyspepsia  striving,  if  not  to 
govern,  at  least  to  hold  the  balance  of 
power ! 

Another  equally  serious  defect  lies  in  the 
inadequacy  of  our  records.  The  amount 
of  economic  material  buried  in  the  archives 
of  our  States  is  enormous.  The  material 
buried  in  the  records  of  corporations,  of 
labor  unions,  of  voluntary  societies,  may 
be  even  greater.  The  mere  index  of  State 
economic  documents  which  is  being  com- 
piled for  the  Carnegie  Institution  of  Wash- 
ington fills  a  portly  quarto  for  each  one  of 
the  older  States.  The  cream  of  contempo- 
rary   evidence    available    for    the    Docu- 

50 


EXPERIMENTATION  IN  THE  UNITED   STATES 

mentary  History  of  American  Industrial 
Society,  recently  published  by  Professor 
Commons  and  his  collaborators,  fills  eleven 
volumes.  But  in  spite  of  this  vast  material, 
we  still  have  to  contend  with  the  imperfec- 
tion of  many  of  our  records  and  with  the 
difficulty  of  accurate  mensuration.  Profes- 
sor Dewey,  in  his  able  presidential  address 
delivered  before  the  American  Economic 
Association  in  1909,  enlarged  upon  the 
inaccuracies  of  economic  observation,  and 
all  serious  economists  must  recognize  the 
truth  of  what  he  then  said.  But  it  is  the 
task  of  the  economist  to  overcome  diffi- 
culties, not  to  shrink  from  them,  and  he  can 
best  do  this  by  helping  his  successors  to 
obtain  a  trustworthiness  in  their  material 
which  is  not  always  available  for  him.  It 
is  encouraging  that  the  Federal  authorities, 
and  the  State  governments  as  well,  are 
relying  more  and  more  upon  trained  econo- 
mists to  record  economic  facts  in  the  form 
of  statistical  or  monographic  studies.  But 
we  should  remember  that  such  studies  are 
not  the  only  output  of  a  governmental  kind 
to  which  we  must  turn.  Every  law  affect- 
ing economic  relations  must  be  treated  as 
an   experiment,   the    recording   of   whose 

51 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

results  should  be  provided  for  in  the  law 
itself.  How  much  futile  discussion  and 
how  many  errors  would  be  avoided,  if  we 
were  able  from  year  to  year  to  put  our 
hands  on  the  results  of  the  operation  of 
laws  bearing  upon  economic  relations! 
Just  as  modern  hospitals  not  only  provide 
physicians  and  nurses  but  also  laboratories 
and  records,  so  every  legislature  should 
have  its  economic  annex,  in  which  not 
merely  the  text  of  laws  but  also  their 
results  may  be  made  available  both  for  the 
legislature  and  for  the  student. 

The  conception  of  history  as  an  economic 
laboratory  is  quite  different  from  the 
common  conception  of  economic  history. 
History  is  in  the  main  descriptive.  It  seeks 
to  give  us  a  picture  of  the  past.  If  it  goes 
beyond  that,  it  seldom  attempts  more  than 
to  trace  general  causes,  or  to  lay  down  a 
philosophy  of  history  or  a  theory  of  his- 
torical evolution.  The  economic  utilization 
of  history  is  almost  the  antithesis  of  the 
economic  interpretation  of  history,  since 
the  latter  is  seeking  a  law  of  history  and 
the  former,  laws  of  economics.  The  econo- 
mist undoubcedly  owes  a  debt  of  gratitude 
to  historians,  and  particularly  to  economic 

52 


EXPEEIMENTATION  IN  THE  UNITED  STATES 

historians,  for  the  material  which  they 
have  put  at  his  disposal,  and  the  brilliant 
address  on  ''Social  Forces  in  American 
History,"  delivered  in  1910  by  the  presi- 
dent of  the  American  Historical  Associa- 
tion, is  an  indication  of  the  increasing 
interest  which  historians  are  taking  in 
social  and  economic  elements.  The  con- 
trast, however,  between  their  point  of  view 
and  the  economic  point  of  view  cannot  be 
better  illustrated  than  by  quoting  from 
this  address.  Professor  Turner  says  that 
he  has  undertaken  his  survey  for  two  pur- 
poses :  ''First,  because  it  has  seemed  fitting 
to  emphasize  the  significance  of  American 
development  since  the  passing  of  the  fron- 
tier, and,  second,  because  in  the  observa- 
tion of  present  conditions  we  may  find 
assistance  in  our  study  of  the  past. '  '^  The 
economist,  while  fully  appreciating  the 
value  and  the  necessity  of  studying  history 
from  this  point  of  view,  must  yet  go  a  step 
further  and  must  use  the  records  of  the 
past  as  a  means  of  disclosing  the  operation 
of  economic  forces. 

9  Frederick  J.  Turner :  Social  Forces  in  American 
History,  American  Historical  Eeview,  Vol.  XVI,  No.  6, 
p.  225. 

53 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

The  difference  between  description  and 
science  may  be  illustrated  by  an  example 
taken  from  the  history  of  physics.  The 
lamp  hanging  in  the  cathedral  of  Pisa 
might  be  described  in  every  artistic  detail 
by  a  traveler.  The  history  of  the  designer 
and  the  story  of  its  construction  might  be 
told  in  full,  without  adding  in  the  least  to 
our  knowledge  of  physics.  It  took  the 
mind  of  a  Galileo,  at  once  analytical  and 
constructive,  to  recognize  in  the  apparently 
meaningless  oscillations  of  the  lamp  a  con- 
stantly acting  force,  and  thus  to  discover 
the  law  of  the  pendulum.  So  the  economist 
must  recognize  beneath  the  events  of 
history  the  constantly  acting  economic 
impulses  in  the  mind  of  man. 

This  view  of  economic  history  as  a 
series  of  experiments  is  not  in  conflict  with 
the  evolutionary  concejDtion  of  history. 
Indeed,  it  is  really  necessary  to  explain  it 
rationally,  for,  unless  we  are  willing  to 
accept  a  blind  fatalism,  according  to  which 
history  moves  on  without  being  controlled 
by  human  volition,  we  must  recognize  that 
what  seems  to  us  the  orderly  development 
of  institutions  is  rational  and  orderly,  pre- 
cisely because  men  have  been  constantly 

54 


EXPEEIMENTATION  IN  THE  UNITED  STATES 

trying  new  expedients  and  have  deliber- 
ately retained  those  institutions  and  prac- 
tices which  stand  the  test  of  experience. 
The  very  expression,  "survival  of  the 
fittest,"  implies  in  human  history  a  con- 
stant testing  of  new  variants,  as  it  does  in 
the  animal  world,  with  this  difference, 
however,  that  in  the  animal  world  the 
changes  are  brought  about  by  the  so-called 
forces  of  nature,  which  is  another  way 
of  saying  that,  like  Topsy,  ''they  just 
growed,"  while  in  history  most  of  the 
changes  have  been  produced  by  a  conscious 
effort  of  the  human  mind  to  bring  about 
results.  This  is  none  the  less  true,  because 
few  individuals  at  the  time  have  a  suffi- 
ciently broad  grasp  of  what  is  happening 
and  a  sufficiently  profound  knowledge 
of  the  world  to  know  whither  they  are 
tending. 

Economic  science,  after  a  period  of 
public  favor  in  which  its  generalizations 
enjoyed  considerable  confidence,  seems  to 
have  gone  through  two  rather  distinct 
phases.  When  it  found  itself  unable  to 
grapple  with  many  of  the  problems  of  the 
day,  it  was  derided  as  the  ' '  dismal  science ' ' 
by  impatient  reformers.     More  recently, 

55 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

since  it  has  begun  to  interest  itself  more  in 
practical  questions,  it  seems  to  be  enjoying 
a  popularity,  especially  in  the  United 
States,  which  is  not  without  its  dangers. 
It  attracts  large  classes  in  our  universities ; 
it  is  being  studied  in  our  theological 
schools  and  by  our  churches ;  large  sums  of 
money  are  being  spent  by  our  governments 
in  the  interest  of  economic  investigations. 
The  economist  must  be  on  his  guard 
against  allowing  this  present  popularity 
to  encourage  dilettantism.  Our  age  is 
growing  more  and  more  critical.  The  busi- 
ness world  is  appMng  rigorous  tests  to 
ascertain  results.  The  educational  world 
is  studying  methods  of  efficiency.  The 
economist  is  liable  to  go  through  another 
period  of  discredit,  unless  he  realizes  that 
he  must  apply  to  his  study  the  patience,  the 
exactitude,  the  devotion  to  truth  by  which 
the  great  conquests  of  natural  science  have 
been  obtained.  He  needs  all  of  these  quali- 
ties in  a  larger  degree  even  than  the  stu- 
dent of  nature,  because  of  the  long  period 
through  which  his  observations  have  to 
extend,  and  the  great  complexity  of  the 
phenomena  '\vith  which  he  is  dealing.  But 
if  he  can  apply  these  qualities  in  the  reali- 
se 


EXPEKIMENTATION  IN  THE  UNITED  STATES 

zation  that  the  world  of  economic  change  is 
his  laboratory,  and  that  it  is  his  task  to 
interpret  its  lessons,  he  will  have  his 
reward,  in  helping  to  solve  the  great 
human  problems  which  have  vexed  man- 
kind since  the  dawn  of  history. 


57 


CHAPTER  IV 

The  Pathology  of  Progress 

The  world  of  nature,  if  left  to  itself,  is 
generally  in  a  state  of  more  or  less  perfect 
equilibrium.  Those  plants  and  those  ani- 
mals survive  which  are  best  adapted  to 
their  environment;  the  others  perish. 
Each  species  has  its  enemies  which  prevent 
any  one  of  them  from  monopolizing  the 
earth  and  which,  in  turn,  are  held  in  check 
by  their  own  enemies.  As  soon  as  civilized 
man  steps  upon  the  stage,  however,  this 
harmony  of  nature  is  disturbed,  and  the 
intruder  may  be  positively  destructive  of 
those  forms  of  life  which  are  not  able  to 
adapt  themselves  to  him  or  to  minister 
directly  to  his  wants.  A  good  illustration 
of  this  is  given  by  Theodore  Roosevelt,  in 
his  Hunting  Trips  of  a  Ranchman,  ^vith 
regard  to  the  buffalo. 

The  most  striking  characteristics  of  the  buf- 
falo [he  says],  and  those  which  had  been  found 
most  useful  in  maintaining  the  species  until  the 
white  man  entered  upon  the  scene,  were  its 
phenomenal  gregariousness,  ....  its  massive 
bulk,  and  unwieldy  strength Its  tough- 

58 


THE  PATHOLOGY  OF  PROGRESS 

ness  and  hardy  endurance  fitted  it  to  contend 
with  purely  natural  forces :  to  resist  cold  and  the 
winter  blasts,  or  the  heat  of  a  thirsty  summer, 
to  wander  away  to  new  pastures  when  the  feed 
on  the  old  was  exhausted,  to  plunge  over  broken 
ground,   and  to  plough  its  way  through  snow 

drifts  or  quagmires 

But  the  introduction  of  the  horse,  and  shortly 
afterwards  the  incoming  of  white  hunters  carry- 
ing long-range  rifles,  changed  all  this.  The  buf- 
faloes' gregarious  habits  simply  rendered  them 
certain  to  be  seen,  ....  their  speed  was  not 
such  as  to  enable  them  to  flee  from  a  horseman ; 
and  their  size  and  strength  merely  made  them 
too  clumsy  either  to  escape  from  or  to  contend 
with  their  foes.^ 

This  is  the  first  effect  of  civilized  man, 
but  not  the  last.  The  book  in  question  was 
written  over  a  quarter  of  a  century  ago, 
when  the  buffalo  seemed  to  be  on  the  point 
of  extermination.  Fortunately,  as  man 
becomes  more  enlightened,  he  begins  to 
realize  that,  in  his  struggle  for  the  suprem- 
acy over  nature,  he  may  carry  the  contest 
too  far  for  his  own  good.  We  now  find  that, 
somewhat  tardily,  civifized  man  is  trying 
to  save  from  extinction  the  few  scattered 
specimens  of  the  bison  that  have  survived, 
and  even  by  skillful  crossing  to   endow 

1  Theodore  Roosevelt :  Hunting  Trips  of  a  Rancliman, 
1885,  pp.  244-245. 

59 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

domestic  cattle  with  some  of  those  good 
qualities  of  their  wild  cousins  which  have 
enabled  them  to  cope  successfully  mth  the 
climate  of  the  plains  through  so  many  gen- 
erations. Thus  the  stage  of  domestication 
follows  the  hunting  stage  of  civilization, 
and  the  crude  and  wasteful  processes  of 
natural  selection  are  replaced  by  those  of 
artificial  selection. 

Like  Orlando  in  the  Forest  of  Arden, 
civilized  man  begins  the  struggle  for  exist- 
ence with  a  drawn  sword  and  a  threat. 

He  dies  that  touches  any  of  this  fruit 
Till  I  and  my  ajQfairs  are  answered. 

In  time  experience  teaches  him,  in  the 
the  words  of  the  Banished  Duke,  that 

Your  gentleness  shall  force 
More  than  your  force  move  us  to  gentleness.^ 

The  course  of  man's  dealings  with 
nature  is  paralleled  in  his  dealings  with  his 
fellow  men.  Almost  every  new  invention, 
almost  every  new  process,  creates  a  power 
which  is  susceptible  of  abuse,  or  leads  to 
changes  in  conditions  which  may  be  injuri- 
ous to  certain  classes  or  certain  interests. 

2  As  You  Like  It,  Act  II,  Scene  7. 
60 


THE  PATHOLOGY  OF  PROGEESS 

The  pioneers  of  industry  have  much  in 
common  with  the  pioneers  of  the  frontier. 
Even  those  improvements  which  seem  alto- 
gether good  may  bring  in  some  incidental 
evil,  which,  while  not  by  any  means 
counterbalancing  the  good,  yet  makes  itself 
felt  as  something  to  be  removed.  A  good 
example  of  this  is  seen  in  the  homespun 
industry  of  some  of  the  Scotch  isles.  The 
island  of  Harris  has  long  been  famous  for 
the  quality  of  its  tweeds.  The  climate  is, 
however,  very  wet,  and  the  sheep  have  been 
so  subject  to  disease  that  it  has  been  the 
custom  to  rub  them  with  tar  and  grease  to 
protect  them  from  the  cold.  More  recently 
an  improved  breed  of  sheep  has  been  intro- 
duced, which  is  able  to  resist  the  climate, 
but  it  is  now  found  that  the  grease  which 
protected  the  sheep  also  improved  the 
quality  of  the  wool,  so  that  the  newer 
fabrics  are  not  as  good  as  the  old  ones.^ 
This  is  a  common  experience,  not  only  in 
the  history  of  inventions,  but  in  the  his- 
tory of  man's  efforts  to  introduce  higher 
forms  of  economic  life  and  a  higher  kind  of 
civilization. 

3  United  States  Consular  Reports,  November,  1909,  p. 
223. 

61 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

The  most  important  step  upwards  from 
savagery  is  to  substitute  the  law  of  con- 
tract for  the  law  of  conquest.  But  as  soon 
as  violence  is  put  down,  there  is  danger 
that  the  physical  strength  and  the  courage 
which  were  essential  to  existence  in  the 
ruder  age  will  be  lost  or  impaired.  New 
dangers  are  also  possible.  If  the  law 
decrees  that  wealth  shall  be  distributed, 
not  as  the  result  of  brute  force,  but  through 
free  bargaining  among  producers,  there  is 
a  possibility  that  the  advantage  will  go,  not 
to  the  man  who  produces  the  most,  but  to 
the  man  who  is  most  unscrupulous  in  driv- 
ing a  hard  bargain.  It  then  becomes  neces- 
sary to  set  up  a  new  standard  and  to 
prohibit,  not  only  positive  fraud,  but  also 
all  contracts  which  may  be  so  unequal  in 
their  operation  as  to  discourage  industry 
and  promote  trickiness.  Without  violence, 
it  is  possible  so  to  frame  a  labor  contract, 
that  the  worker  shall  become  virtually  the 
bondsman  of  the  employer.  Thus  slavery 
and  peonage  have  to  be  prohibited  as  con- 
trary to  public  policy.  But  abolish  slavery, 
and  you  abolish,  with  the  right  of  exploita- 
tion, the  obligation  of  the  master  to  care 
for   the   worker   in    sickness    and   in    old 

62 


THE  PATHOLOGY  OF  PROGRESS 

age.  Docility  and  trustfulness,  which  may 
have  been  useful  characteristics  of  the 
slave,  are  converted  in  the  free  man  into 
that  disregard  of  the  future  which  we  call 
improvidence,  and  the  superannuated  or 
sick  worker,  who  has  made  no  savings  and 
has  no  family  to  care  for  him,  constitutes 
a  new  problem.  Relieve  the  sick  and  the 
aged  by  means  of  private  charity  or  public 
relief,  and  you  run  the  risk  of  developing 
the  institutional  pauper  and  the  tramp, 
those  sorry  by-products  of  civilization,  who 
will  not  support  themselves,  but  whom 
charity  will  not  suffer  to  starve,  and  who 
may  not  be  put  to  forced  labor  without  a 
violation  of  the  constitutional  prohibition 
of  involuntary  servitude. 

These  evils,  which  are  observed  so 
frequently  in  connection  mth  efforts  to 
improve  social  institutions,  lead  different 
minds  to  quite  opposite  conclusions.  Some, 
exaggerating  the  incidental  evils  of  pro- 
gress, decry  all  efforts  at  betterment,  and 
long  for  the  good  old  times  when  there 
were  no  reformers.  Others,  realizing 
strongly  the  evils  which  grow  up  without 
regulation,  think  that  reform  has  not  been 
carried   far   enough    and   advocate    some 

63 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

extreme  remedy  such  as  socialism.  In 
view  of  the  difficulties  which  seem  to  attend 
both  action  and  inaction,  we  naturally  ask 
if  there  is  no  principle,  based  upon  experi- 
ence, which  wdll  enable  us  so  to  steer  the 
ship  of  state  as  to  avoid  both  the  Scylla 
of  conservatism  and  the  Charybdis  of 
radicalism. 

In  seeking  such  a  principle,  the  first 
thing  to  realize  is  that  w^e  are  living  in  a 
highly  dynamic  period  of  the  world's  his- 
tory. We  are  so  accustomed  to  change, 
that  we  sometimes  do  not  realize  all  that 
it  means,  or  the  great  contrast  which  exists 
between  the  rate  of  change  of  the  present 
day  and  any  rate  which  has  existed  in  any 
previous  period  of  the  known  history  of 
the  world.  These  changes  are  seen,  not 
only  in  the  endless  improvements  in 
mechanical  processes  mth  which  the  great 
inventions  of  the  eighteenth  and  nineteenth 
centuries  have  made  us  familiar.  More 
recently  this  spirit  of  progress  has  taken 
hold  of  what  throughout  history  has  been 
the  most  conservative  of  callings,  and  agri- 
culture is  now  stimulated  and  vitalized  by 
the  application  of  science.  New  types  of 
plants  and  animals  are  introduced  in  order 

64 


THE  PATHOLOGY  OF  PROGRESS 

to  meet  peculiar  conditions;  new  methods 
of  farming  are  devised  by  which  dry  lands, 
which  have  hitherto  been  considered  infer- 
tile, are  impressed  into  the  service  of  an 
increasing  population.  The  really  signifi- 
cant thing  with  regard  to  these  and  other 
improvements  is  not  that  they  are  numer- 
ous and  far-reaching,  but  that  they  are 
being  deliberately  planned.  They  are  no 
longer  the  happy  inspiration  of  the  casual 
man  of  genius,  they  are  often  the  outcome 
of  a  course  of  study  deliberately  under- 
taken with  a  definite  end  in  view.  Such 
establishments  as  the  Carnegie  Institution 
of  Washington  and  the  Sage  Foundation, 
the  agricultural  experiment  stations  of  the 
several  States,  and  many  departments  of 
our  universities  and  schools  of  agriculture, 
are  not  only  pushing  forward  our  knowl- 
edge of  nature  and  her  processes,  but  deter- 
mining in  advance  the  lines  on  which 
progress  shall  be  made. 

An  interesting  illustration  of  the  ten- 
dency to  anticipate  discoveries  is  seen  in 
the  recent  history  of  polar  exploration. 
For  centuries  the  difficulties  of  reaching 
the  North  Pole  seemed  almost  insurmount- 
able.    One  expedition  after  another  had 

65 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

been  undertaken  only  to  add  a  new  chapter 
to  the  history  of  failures.  When,  during 
the  summer  of  1909,  it  was  announced  that 
two  explorers  had  independently  succeeded 
in  accomplishing  this  feat,  it  was  also  dis- 
closed that  each  had  contracted  in  advance 
Avith  certain  newspapers  for  the  exclusive 
right  to  pubhsh  an  account  of  the  dis- 
covery, which,  at  the  time  of  making  the 
contract,  was  still  problematical.  Two 
things  are  significant  in  this  episode :  the 
first  is  the  eagerness  with  which  discovery 
is  pursued;  the  second,  the  readiness  to  use 
a  still  unmade  discovery  as  the  basis  of  a 
property  right.  And  if,  as  has  since  been 
proved,  one  of  these  expeditions  was  partly 
fictitious,  this  only  makes  the  illustration 
more  striking,  as  shomng  the  impalpable 
foundation  upon  which  a  property  right 
may  be  built  up.  When  the  art  of  aerial 
navigation  was  still  in  its  infancy,  an  insur- 
ance company  advertised  itself  as  pre- 
pared to  underwrite  aerial  risks.  Every 
one  of  the  fifty  or  sixty  thousand  patents 
applied  for  in  our  country  in  a  single  year 
represents  a  desire  on  the  part  of  someone 
to  effect  a  change  in  methods  of  production 
and  to  use  it  as  the  basis  of  some  property 

66 


THE  PATHOLOGY  OF  PROGRESS 

right.  It  also  represents  the  possibility  of 
some  dislocation  of  our  industrial  system, 
or  some  new  menace  to  certain  interests. 


67 


CHAPTEE  V 

Economic  Progeess  and  Labor  Legislation 

Professor  J.  B.  Clark,  in  Ms  sugges- 
tive study  of  Economic  Theory  as  Ap- 
plied to  Modern  Problems,  enumerates 
five  elements  as  characteristic  of  a 
dynamic  society:  (1)  An  increase  in 
population.  (2)  An  increase  in  capital. 
(3)  Changes  in  the  methods  of  produc- 
tion. (4)  Changes  in  the  methods  of 
organization.  (5)  Changes  in  consumers' 
wants. ^ 

Each  of  these  five  features  of  economic 
progress  involves  some  new  problems 
affecting  labor.  Many  of  these,  fortu- 
nately, solve  themselves;  many  others  do 
not,  and  the  experience  of  a  century  has 
proved  that  in,  at  least,  many  cases  some 
form  of  legislation  is  necessary  in  order  to 
prevent  the  incidental  evils  of  progress 
from  being  perpetuated  and  aggravated. 
Let  us  take  them  up  seriatim. 

1  John  Bates  Clark :  Essentials  of  Economic  Theory, 
1907,  pp.  203-206. 

68 


PEOGRESS  AND  LABOR  LEGISLATION 

1.  The  increase  in  population  often 
involves  a  crowding  in  industrial  centers 
with  an  increase  in  disease,  which  must  be 
dealt  mth  by  tenement-house  laws  and 
sanitary  measures.  The  increase  of  popu- 
lation combined  with  modern  methods  of 
transportation  leads  to  the  amazing  migra- 
tion of  modern  times,  which,  in  turn, 
creates  new  difficulties.  To  prevent  the 
spread  of  contagious  diseases,  to  prevent 
the  abuse  of  the  newcomers,  some  restric- 
tions have  to  be  placed  by  law,  not  to  stop, 
but  to  control,  this  flood  of  immigration. 

2.  An  increase  in  capital  tends  to  make 
large  aggregations  of  wealth,  which  by 
their  very  size  weaken  the  personal  ele- 
ment involved  in  the  relation  of  employer 
and  employed.  The  simple,  almost  patri- 
archal, expression  "master  and  servant," 
which  served  as  the  rubric  of  the  law  on 
these  subjects  in  the  time  of  Blackstone 
and,  indeed,  was  not  superseded  in  Eng- 
land as  a  legal  term  until  1875,  is  no  longer 
applicable  to  modern  industry,  nor  are  old 
methods  of  bargaining  satisfactory.  New 
machinery  must  be  devised  to  facilitate 
collective  bargaining  and  to  mitigate  the 
effects  of  collective  disagreement. 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

3.  Changes  in  the  methods  of  produc- 
tion, involving,  as  they  do,  more  powerful 
and  more  complicated  machines,  bring 
many  evils.  In  the  early  days  of  the  fac- 
tory system,  the  displacement  of  skilled 
labor  by  unskilled  was  the  most  obvious 
injury  felt  by  the  workers.  At  the  present 
time  we  are  more  concerned,  because  better 
acquainted,  with  the  remoter  and  indirect 
effects  of  the  age  of  machinery.  We  see  new 
causes  of  accident,  new  kinds  of  industrial 
diseases,  combined  with  a  greater  difficulty 
of  securing  the  individual  worker  against 
the  effects  of  accident  and  disease.  Long 
experience  has  shown  that  these  particular 
difficulties  do  not  correct  themselves,  and 
one  of  the  greatest  problems  in  labor  leg- 
islation at  the  present  time  is,  on  the  one 
hand,  to  diminish  accidents  and  disease, 
and  on  the  other,  to  provide  some  form  of 
compensation  or  some  form  of  insurance 
for  those  who  are  their  victims.  Still 
more  important,  if  possible,  is  the  effect 
of  machinery  upon  the  children  and 
therefore  upon  the  workers  of  the  future, 
and  this,  being  comparatively  remote  and 
not  realized  for  one  or  two  generations,  is 
the  most  difficult  problem  for  the  individ- 

70 


PEOGRESS  AND  LABOR  LEGISLATION 

ual  to  solve.  Government  intervention 
seems  the  only  agency  sufficiently  power- 
ful and  sufficiently  general  to  save  a  coun- 
try from  the  deterioration  of  its  human 
capital. 

4.  Changes  in  organization  tend  on  the 
whole  to  give  a  new  advantage  to  capital. 
It  is  now  possible  for  a  single  company 
or  combination  of  companies  to  be  spread 
out  over  many  states  or  many  continents. 
This,  while  it  makes  for  efficiency,  also 
creates  a  power  which  may  be  abused  and 
results  in  a  demand  for  laws  putting  upon 
capital  new  responsibilities  in  the  inter- 
ests of  its  employees.  It,  above  all,  points 
to  the  necessity  of  interstate  and  interna- 
tional labor  legislation.  With  the  aid  of  the 
International  Association  for  Labor  Leg- 
islation, a  number  of  international  treaties 
of  great  importance  have  been  made,  one 
of  the  more  recent  of  w^hich  is  a  treaty 
between  France  and  Great  Britain,  giving 
the  workers  of  those  countries  reciprocal 
advantages  in  obtaining  compensation  for 
accidents. 

5.  Changes  in  consumers'  wants  create 
an  artificial  instability  of  business,  which 
shows    itself    in    alternating    periods    of 

71 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

activity  and  stagnation.  The  one  tends 
to  produce  overexertion,  the  other,  unem- 
ployment, and  each  demands  legislation. 

It  will  be  noticed  that  in  each  of  these 
five  cases  the  main  purpose  of  the  legisla- 
tion in  question  is  to  prevent  some  injury 
to  the  human  beings  for  whose  sake  eco- 
nomic progress  exists,  and  on  whose  effi- 
ciency its  continuance  depends.  We  should, 
therefore,  add  to  the  five  elements  of  a 
dynamic  society  which  have  been  enumer- 
ated, a  sixth,  which  has  been  comparatively 
neglected  in  the  past,  but  which  may  prove 
in  the  future  to  be  the  most  important  of 
all.  I  refer  to  an  improvement  in  the  qual- 
ity of  the  population  itself.  This  is  not 
altogether  a  dream.  The  average  duration 
of  the  human  life  has  within  a  century  been 
decidedly  lengthened  in  many  of  the  lead- 
ing countries  of  the  world.  In  England 
and  Wales,  e.g.,  the  average  duration  of 
life  among  males  in  the  period  1838  to 
1854  was  39  %o  years,  in  1891  to  1900, 
44  %o.  In  Sweden  the  average  duration 
has  increased  from  39  ^lo  in  1816  to  1840, 
to  50  %o  in  1891  to  1900.  Our  statistics  do 
not  enable  us  to  make  general  statements 
for  the  United  States  as  a  whole,  but  in 

72 


PROGRESS  AND  LABOR  LEGISLATION 

several  of  the  States  the  same  tendency 
shows  itself.^ 

Many  diseases  and  many  accidents  are 
now  recognized  as  clearly  preventable. 
There  is  every  reason  to  believe  that  by 
proper  care  human  life  can  be  lengthened, 
disease  and  accidents  diminished,  and  the 
physical  strength  of  the  population  im- 
proved; but,  in  order  to  bring  about  this 
most  important  element  of  progress,  the 
state  itself,  which  alone  has  an  interest 
extending  beyond  that  of  the  individual 
lifetime,  must  intervene,  in  order  to  pre- 
vent well-recognized  causes  of  retrogres- 
sion and  also  to  promote  those  elements 
which  make  for  improvement. 

In  this  process,  mistakes  are  pretty  sure 
to  be  made.  Eugenics  has  not  yet  reached 
the  position  of  an  exact  science.  All  legis- 
lation that  is  passed  with  good  intentions 
does  not  produce  the  desired  results.  The 
point  to  be  emphasized  is  that  economic 
progress  in  itself  involves  inevitably  in 
each  of  its  elements  some  form  of  labor 
legislation.  As  long  as  change  continues, 
we  must  expect  that  labor  legislation  mil 

2  Irving  Fisher:  Report  on  National  Vitality,  1909, 
pp.  18,  19. 

73 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

be  necessary.  If  the  laws  of  the  Medes 
and  Persians  were  immutable,  it  was  be- 
cause their  economic  life  was  stagnant. 
We  should  not  forget,  however,  that  the 
oriental  politicians  who  are  responsible 
for  introducing  this  tradition  into  litera- 
ture invoked  the  immutability  of  the  law 
on  behalf  of  a  brand-new  measure  of  their 
own  devising,  the  purpose  of  which  was  to 
check  reform  by  casting  the  reformer  into  a 
den  of  lions.  For  according  to  the  prophet 
Daniel,  ''All  the  presidents  of  the  king- 
dom, the  governors,  and  the  princes,  the 
counsellors,  and  the  captains,  have  con- 
sulted together  to  establish  a  royal  statute, 
and  to  make  a  firm  decree,  that  whosoever 
shall  ask  a  petition  of  any  God  or  man  for 
thirty  days,  save  of  thee,  0  king,  he  shall 
be  cast  into  the  den  of  lions.  Now,  0  king, 
establish  the  decree,  and  sign  the  writing, 
that  it  be  not  changed,  according  to  the 
law  of  the  Medes  and  Persians,  which 
altereth  not.'"  At  the  present  day,  there 
are  no  more  ardent  advocates  of  the  immu- 
tability of  the  law,  none  who  more  zeal- 
ously urge  that  things  be  left  alone,  than 
those  the  value  of  whose  property  rights 

3  Book  of  Daniel,  vi.   7,  8. 
74 


PEOGEESS  AND  LABOE  LEGISLATION 

rests  upon  some  comparatively  recent  law, 
such  as  a  liberal  charter  or  a  high  import 
duty. 

This  conception  of  labor  legislation,  if 
it  could  be  generally  entertained  by  our 
legislators  and  the  public,  would  lead  to 
certain  important,  practical  results. 

1.  Labor  legislation  would  be  less  in 
quantity  and  better  in  quality.  A  measure 
adopted  for  what  seems  an  emergency  is 
almost  always  hastily  drawn  and  soon 
requires  amendment.  As  soon  as  it  is  rec- 
ognized that  a  certain  type  of  legislation 
results  from  permanent  conditions,  more 
care  will  be  bestowed  upon  it,  and  the 
changes  will  be  fewer. 

2.  Legislation  would  also  on  the  whole 
be  more  prompt.  Certain  general  effects 
of  industrial  progress  are  well  known  by 
the  experience  of  other  states.  These  are 
often  not  corrected  until  they  have  become 
so  flagrant  that  they  are  taken  up  by  phi- 
lanthropists or  trades  unions,  and  correc- 
tive measures  are  then  passed  under 
pressure  without  due  study.  Legislation  is 
often  so  afraid  of  crossing  its  bridges 
before  it  comes  to  them,  that  it  does  not 
keep  them  in  decent  repair. 

75 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

3.  Laws  would  be  more  uniform,  if 
labor  legislation  were  recognized  as  result- 
ing from  certain  general  economic  condi- 
tions which  are  universal,  or  nearly  so. 
More  care  would  be  taken  to  secure  har- 
monious action  between  different  countries 
and  different  States  in  the  same  federa- 
tion. 

4.  Labor  laws  would  be  less  frequently 
the  expression  of  class  feeling.  Many  bills 
which  excite  prejudice  on  this  ground 
would  be  recognized  as  being  really  in  the 
general  interest.  The  courts,  too,  might 
perhaps  find  it  easier  to  distinguish  be- 
tween enactments  which  are  really  class 
legislation  and  as  such  condemned  by  con- 
stitutional principles,  and  those  laws 
which,  while  apphing  to  certain  definite 
groups,  are  in  reality  passed  for  the 
benefit  of  all. 

5.  The  recognition  of  labor  legislation 
as  a  permanent  feature  of  our  statutes 
would  make  it  more  consistent,  because  the 
very  thought  of  adapting  it  to  changes  in 
economic  conditions  would  force  us  to 
think  more  of  those  economic  ideals  which 
underlie  subconsciously  most  social  legisla- 

76 


PROGRESS  AND  LABOR  LEGISLATION 

tion,  but  are  not  always  recognized  or 
steadily  followed. 

Each  great  period  of  the  world's  history 
has  had  some  such  economic  ideal,  which, 
whether  or  not  formulated  in  words,  has 
become  a  part  of  the  mores  of  the  time  and 
country  and  has  guided  the  law  in  its  main 
features.  Under  the  feudal  system,  soci- 
ety was  divided  into  horizontal  strata, 
based  mainly  on  their  relation  to  land,  and 
involving  specific  duties  as  well  as  rights. 
The  guild  system  dovetailed  quite  prop- 
erly with  this  system,  although  not 
strictly  a  part  of  it,  since  under  it  the 
mechanics  of  the  cities  were  classified  and 
their  places  definitely  determined,  the 
crafts  themselves  being  more  or  less  hered- 
itary. Whatever  the  merits  or  demerits 
of  this  system,  it  was  one  of  order  rather 
than  one  of  freedom,  one  of  conservatism 
rather  than  of  progress. 

The  economic  ideal  of  the  United  States 
is  very  different  from  this.  It  may  not  be 
easy  to  define  it  in  a  few  words,  but  its 
most  concise  expression  is  perhaps  found 
in  that  part  of  the  preamble  of  the  Federal 
Constitution  which  states,  after  enumerat- 
ing   certain    political    purposes,    that    its 

77 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

object  is  "to  promote  the  general  welfare 
and  secure  the  blessings  of  liberty  to  our- 
selves and  our  posterity."  Our  ideal  is 
clearly  not  a  caste  system,  nor  even  a  hier- 
archy of  functions  such  as  existed  under 
the  feudal  system.  It  is  a  system  of  free- 
dom which  implies  equality  of  opportunity 
for  all.  This  does  not  mean  anarchy,  for  it 
is  a  liberty  which  brings  blessings.  It  is 
not  the  paper  liberty  of  a  phrase.  It  is, 
moreover,  a  liberty  of  the  race,  not  of  the 
individual.  All  this  implies,  therefore,  a 
liberty  so  regulated  as  to  prevent  one  indi- 
vidual or  one  group  from  abusing  their 
liberty  to  the  harm  of  others. 

This  policy,  though  unfortunately  not 
always  realized,  is  seen  in  many  typical 
pieces  of  legislation,  both  Federal  and 
State.  The  public  land  policy  of  the 
United  States  is  based  upon  the  idea  of 
putting  the  land  into  the  hands  of  small 
farmers,  and  therefore  preventing  its 
monopolization  by  a  few.  The  homestead 
exemption  laws  of  our  States  interfere 
with  freedom  of  contract  in  the  interest  of 
the  family.  The  Federal  government  intro- 
duced within  the  first  few  years  of  its 
existence  a  system  of  caring  for  seamen 

78 


PKOGEESS  AND  LABOE  LEGISLATION 

of  the  merchant  marine  in  case  of  sickness 
by  means  of  what  would  now  be  called 
compulsory  sick  insurance.*  This  remark- 
able piece  of  labor  legislation,  enacted  in 
1798,  anticipated  by  nearly  ninety  years 
the  introduction  of  general  compulsory 
sick  insurance  by  Germany,  showing  that, 
even  in  those  early  days  of  weakness  and 
decentralization,  the  United  States  was 
ready  to  practice  social  politics,  when  the 
practicability  and  the  necessity  of  it  were 
apparent.  If  a  few  years  earlier  Alex- 
ander Hamilton  advocated  a  protective 
tariff,  partly  on  the  ground  that  it  would 
introduce  the  factory  system  and  thus 
secure  the  employment  of  children  ''of  a 
tender  age,'"  this  was  not  because  of  any 
desire  to  break  down  the  health  of  the 
population,  but  simply  because  the  evils 
of  the  factory  system  were  not  appreciated, 
as  were  the  dangers  of  the  sailor's  life. 

We  are  fortunate  in  this  country  in  hav- 
ing an  ideal  clearly  expressed  and  pretty 

4  For  a  full  history  of  tlie  Marine  Hospital  Service  the 
writer  is  indebted  to  a  still  unpublished  monograph  on 
the  subject,  written  by  Dr.  A.  M.  Edwards  for  the 
Carnegie  Institution  of  Washington. 

5  Eeport  on  Manufactures,  1791,  p.  87  of  reprint  of 
1837. 

79 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

generally  accepted,  and  it  is  this  ideal 
which  must  give  consistency  to  labor  leg- 
islation. But  it  is  a  consistency  of  pur- 
pose, not  of  words,  that  we  must  aim  at. 
A  navigator  might  seem  vacillating  to  a 
landlubber  who  observed  that  he  sailed 
now  on  the  port  tack  and  now  on  the  star- 
board tack  and  constantly  changed  his 
helm.  But  through  all  of  the  apparent 
changes  he  is  working  steadily  against  the 
wind  toward  his  port.  Labor  legislation 
must  likewise  adapt  itself  to  the  particular 
exigencies  of  the  times,  maintaining  always 
as  its  final  purpose  in  the  United  States, 
''to  secure  the  blessings  of  liberty  to  our- 
selves and  our  posterity."  Its  very  prohi- 
bitions are  in  the  interest  of  a  greater 
liberty,  just  as  the  traffic  regulations  of  a 
great  city  put  restrictions  upon  the  indi- 
vidual driver  for  a  time,  in  order  to  secure 
a  freer  circulation  for  the  traffic  as  a 
whole. 

The  movement  for  more  intelligent  labor 
legislation  is  but  a  part  of  the  great  move- 
ment for  the  conservation  of  our  natural 
resources.  But  in  the  construction  of  the 
irrigation  works  which  are  already  re- 
claiming so  many  square  miles  of  territory 

80 


PEOGRESS  AND  LABOE  LEGISLATION 

and  turning  bad  lands  into  fertile  farms, 
the  first  step  is  the  building  of  a  dam. 
There  are  few  persons  now  so  short- 
sighted as  to  suppose  that  these  dams  are 
intended  to  prevent  the  water  from  reach- 
ing the  arid  plains.  Every  one  knows  per- 
fectly well  that  they  are  the  very  first 
condition  of  an  adequate  water  supply. 
Likewise  some  restrictive  legislation  as 
applied  to  labor  is  often  the  condition  of 
real  economic  freedom.  It  means  that 
man  is  at  last  learning  to  apply  to  him- 
self those  principles  of  domestication, 
preservation,  and  improvement  which  he 
applied  to  his  live  stock,  when  he  emerged 
from  the  hunting  stage  of  existence. 


81 


CHAPTER  VI 

Fundamental  Distinctions  in  Labor 
Legislation 

In  the  scholarly  presidential  address, 
which  he  delivered  at  the  first  annual  meet- 
ing of  the  American  Association  for  Labor 
Legislation,  Professor  Ely  dealt  with  the 
relations  of  labor  legislation  to  economic 
theory.  He  showed  that  most  of  the  early 
economists  were  on  principle  opposed  to 
legislation,  which  seemed  to  them  to  be  a 
futile  interference  with  economic  laws,  but 
that  their  successors  gradually  changed 
their  views,  until  at  the  present  day  there 
are  very  few  who  would  condemn  labor 
legislation  as  such.  If,  however,  we  no 
longer  hold  that  all  labor  legislation  is  un- 
scientific and  futile,  neither  do  we  believe 
that  all  that  goes  under  that  title  is  scien- 
tific and  effective.  Still  less  do  we  believe 
that  everything  that  is  demanded  in  the 
name  of  labor  is  going  to  accomplish  what 
is  expected  of  it,  even  when  we  approve  of 


DISTINCTIONS  IN  LABOK  LEGISLATION 

its  general  aim.  And  while  the  doctrine 
of  laissez  faire  no  longer  ranks  as  an 
infallible  principle  of  statecraft,  it  may 
still  serve  the  useful  purpose  of  the  slave 
who  stood  behind  the  triumphant  Roman 
general  to  remind  him  that  he  was  still  a 
man.  We,  too,  need  occasionally  to  be 
reminded  that,  though  legislation  has 
accomplished  much,  it  has  also  frequently 
failed ;  that  it  is  apt,  even  when  successful, 
to  produce  unexpected  results ;  and  that  we 
cannot  be  too  careful  to  study,  with  all  of 
the  statistical  and  administrative  material 
at  our  disposal,  the  complex  operation  of 
past  laws  before  advocating  new  ones.  We 
prefer  to  let  evils  work  their  own  cure,  if 
they  can,  and  we  must  always  balance  the 
''ills  we  have"  against  those  ''we  know  not 
of."  We  have  thus  reached  the  point  at 
which  the  emphasis  should  be  laid,  not  on 
negation,  nor  on  agitation,  but  rather  on 
discrimination. 

The  general  term  labor  legislation  em- 
braces at  the  present  day  a  heterogeneous 
mass  of  enactments  which  impinge  upon 
the  individual  in  very  different  ways,  and 
which  really  fall  into  three  quite  distinct 
classes,  if  we  group  them  with  reference 

83 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

to  their  immediate  bearing  on  economic 
processes. 

In  the  first  class,  which  is  also  the  oldest, 
we  have  what  is  commonly  termed  protec- 
tive labor  legislation.  Familiar  types  are 
laws  limiting  the  age  of  employment  of 
children,  limiting  the  hours  of  employment, 
prohibiting  certain  kinds  of  employment  to 
women  or  children,  requiring  the  use  of 
safety  appliances  in  connection  with  ma- 
chinery, limiting  migration,  etc.  They 
determine  the  conditions  under  which  labor 
must  be  performed,  but  do  not  directly 
affect  the  terms  of  exchange.  They  oper- 
ate like  dykes,  which  confine  a  river  to  a 
certain  bed  but  do  not  change  the  flow  or 
general  course  of  the  water. 

In  the  second  class  we  have  legislation 
which  aims  not  so  much  at  excluding  cer- 
tain unfavorable  conditions  of  labor  as  at 
the  direct  bestowal  of  pecuniary  benefits. 
This  legislation  may  not  inappropriately 
be  called  distributive  or  positive  legisla- 
tion. Compulsory  insurance  laws  which 
require  the  employer  or  the  state  to  con- 
tribute a  part  of  the  funds  would  come 
under  this  head,  as  well  as  employers'  lia- 
bility laws,  old  age  pension  laws,  laws  pro- 

84 


DISTINCTIONS  IN  LABOR  LEGISLATION 

viding  for  the  fixing  of  wages  by  wage 
boards  or  compulsory  arbitration,  etc. 
These  laws  require  certain  positive  contri- 
butions on  the  part  of  the  public,  the 
employer,  or  the  wage  receiver,  or  of  sev- 
eral of  them  combined.  They  directly 
affect  the  terms  of  exchange  by  supple- 
menting or  modifying  the  wage  contract. 

In  the  third  class  we  have  legislation 
which  is  designed  to  encourage  or  promote 
certain  institutions,  but  which  neither  con- 
tains a  prohibition  nor  an  injunction,  and 
may  therefore  be  called  permissive.  Most 
of  these  laws  in  their  application  to  labor 
involve  the  use  of  certain  forms  of  self- 
help.  In  this  group  we  should  include, 
therefore,  laws  permitting  and  regulating 
labor  organizations,  benefit  societies,  co- 
operative associations,  voluntary  arbitra- 
tion boards,  joint  boards  for  collective 
bargaining,  etc. 

The  attitude  of  the  law-giver  towards 
the  citizen  in  these  three  classes  may  be 
tersely  expressed  as  follows:  laws  of  the 
first  class  are  mainly  prohibitive  and  say 
''thou  shalt  not";  laws  of  the  second  class 
are    mainly    mandatory    and    say    "thou 

85 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

shalt ' ' ;  laws  of  the  third  class  are  mainly 
permissive  and  say  'Hhou  mayest." 

It  would  carry  us  too  far  to  attempt  any 
statistical  study  of  the  way  in  which  the 
laws  of  these  three  classes  have  operated 
in  practice,  but  their  influence  upon  eco- 
nomic forces  may  be  explained  by  an  anal- 
ogy drawn  from  another  and  less  debat- 
able department  of  economics.  While  on 
many  topics  economists  are  still  at  vari- 
ance, the  experience  of  the  world  in  dealing 
with  money  has  been  so  long,  and  it  has 
been  the  subject  of  such  careful  study,  that, 
in  spite  of  differences  of  opinion  regarding 
certain  points  of  monetary  policy,  there  is 
a  pretty  general  agreement  regarding  the 
laws  of  monetary  circulation.  One  of  the 
most  important  aims  of  all  monetary  legis- 
lation is  to  establish  a  definite  standard  of 
value.  For  centuries  the  world's  stand- 
ards were  steadily  deteriorating.  For 
many  years  after  Sir  Thomas  Gresham  had 
formulated  his  famous  law,  according  to 
which  bad  money  drives  out  good  money, 
no  means  had  been  discovered  of  coun- 
teracting what  seemed  to  be  an  inevitable 
law  of  monetary  degeneracy.  Just  as  soon 
as  one  metal  depreciated  in  value,  just  as 

86 


DISTINCTIONS  IN  LABOE  LEGISLATION 

soon  as  the  government  issued  coins  of 
light  weight,  or  dishonest  people  sweated 
or  clipped  the  coins,  the  inferior  coins 
tended  to  remain  in  circulation,  while  the 
better  ones  were  melted  down  or  hoarded. 
The  competition  of  those  who  had  money 
to  sell — that  is,  who  wished  to  buy  goods — 
took  the  form  of  offering  the  poorest 
money  that  the  other  party  to  the  bargain 
could  be  induced  to  accept.  Gresham's 
law  was,  however,  not  an  inevitable  law  of 
nature.  Like  all  economic  laws  it  expressed 
a  tendency;  therefore,  it  expressed  what 
will  happen  under  conditions  favorable 
to  that  tendency.  It  did  not  say  that 
the  tendency  could  not  be  neutralized  by 
changing  the  conditions.  And  as  soon  as 
the  government  decreed  that  coins  below 
a  certain  weight  and  fineness  should  not 
be  received  as  legal  tender,  and  provided 
for  the  retirement  of  light  coins,  the  profit 
on  using  cheap  money  disappeared.  The 
question  was  no  longer.  How  bad  a  coin 
can  be  palmed  off  for  a  certain  kind  of  mer- 
chandise? but,  How  much  merchandise 
shall  be  given  for  a  standard  coin? 

Now  there  is  a  close  analogy  between 
the  condition  of  things  in  the  world  of 

87 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

money  down  to  the  end  of  the  eighteenth 
century,  and  in  the  world  of  labor  during 
a  good  part  of  the  nineteenth.  In  the 
wholesale  and  impersonal  demand  for 
labor  which  grew  up  with  the  factory 
system  there  was  a  natural  tendency  to 
employ  those  who  would  work  for  the 
longest  hours  and  at  the  lowest  wages. 
The  result  of  employing  this  cheap  labor 
was  in  the  end  to  also  make  labor  less 
efficient,  and  therefore  worth  less  to  the 
employer.  It  was  practically  impossible 
for  the  individual  to  fight  against  this 
tendency.  An  employer  who  deliberately 
paid  higher  wages  in  the  expectation  of 
getting  more  efficient  labor  was  in  the  posi- 
tion of  a  person  who  should  endeavor  to 
raise  the  standard  of  the  coinage  by  always 
paying  out  the  best  instead  of  the  poorest 
coins  that  passed  through  his  hands.  He 
would  have  his  trouble  for  his  pains,  and 
others  would  reap  the  benefit  of  his  liberal- 
ity. When  laws  were  passed  against  child 
labor,  limiting  the  hours  of  employment, 
limiting  the  age  of  employment,  etc.,  and 
enforcing  them  by  inspection,  a  new  stand- 
ard was  created.  The  buying  and  selling 
of  labor  did  not  cease.    The  demand  and 


DISTINCTIONS  IN  LABOR  LEGISLATION 

supply  acted  as  before.  But  the  conditions 
under  which  they  acted  were  changed.  A 
child  of  ten  years  was  no  longer  legal 
tender  in  the  labor  market.  A  day  of 
thirteen  hours  was  no  longer  a  legal  stand- 
ard of  time  wages.  The  government  did 
for  labor  what  it  had  done  for  money,  by 
providing  that  certain  kinds  of  service 
should  be  as  illegal  as  were  certain  kinds 
of  money.  The  intervention  of  the  State 
established  a  standard,  changed  the  condi- 
tions of  competition,  and  made  it  impos- 
sible for  the  employer  to  employ  labor 
below  a  certain  grade. 

Labor  laws  of  the  second  class,  which  I 
have  designated  as  ''distributive,"  also 
have  their  analogy  in  monetary  legislation. 
Just  as  the  monetary  standard  has  some- 
times been  changed  in  order  to  benefit  a 
certain  class,  especially  to  bring  about  a 
redistribution  of  wealth  between  debtor 
and  creditor,  so  most  of  these  laws  en- 
deavor to  bring  about  a  redistribution  of 
wealth  either  between  employer  and  em- 
ployed, or  between  present  and  future 
income.  If  the  government,  e.g.,  issues 
paper  money  which  is  worth  only  90  per 
cent  of  its  face  value,  the  debtor  gains  a 
89 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

hundred  dollars  on  every  transaction  of  a 
thousand  dollars. 

Just  so  a  law  providing  for  compulsory 
insurance  at  the  expense  of  the  employer 
virtually  says :  Whenever  you  owe  $1  in 
wages  you  are  obliged  to  pay  not  merely 
the  $1  stipulated,  but  $1  plus  a  certain  per- 
centage needed  to  pay  for  the  cost  of  insur- 
ance. Now  while  changes  in  the  value  of 
money  which  are  brought  about  by  unfore- 
seen variations  in  the  value  of  the  metal 
may  produce  beneficial  effects,  history  has 
taught  us  the  danger  of  changes  which  are 
made  deliberately  with  the  intention  of 
helping  one  class  at  the  expense  of  another, 
and  the  history  of  labor  legislation  likewise 
shows  that  such  a  danger  is  inherent  in  all 
legislation  of  this  kind.  The  danger  is  not 
great  enough  in  all  cases  to  condemn  it. 
But  there  is  always  a  risk  of  demoralizing 
the  class  supposed  to  be  benefited  in  any 
law  which  produces  a  gratuitous  distribu- 
tion of  property,  unless  carefully  guarded 
against  abuse.  This  danger  is  seen  in  the 
inheritance  of  millions  by  an  irresponsible 
heir,  in  the  marrying  of  millions  by  a  con- 
scienceless fortune  hunter,  in  the  subsidiz- 
ing of  industry  by  a  protective  tariff,  no 
90 


DISTINCTIONS  IN  LABOE  LEGISLATION 

less  than  in  lavish  poor  relief  and  in  the 
transfer  of  wealth  by  law  to  the  working 
middle  class.  All  such  laws  are  exposed  to 
a  danger  not  found  in  laws  of  the  first 
class,  which  involve  primarily  a  restriction 
rather  than  a  privilege. 

Labor  laws  of  the  third  class  also  find 
their  analogy  in  monetary  legislation. 
Laws  providing  for  the  chartering  of  banks 
are  here  the  counterpart  of  laws  providing 
for  the  organization  of  trade  unions, 
co-operative  societies,  and  voluntary  arbi- 
tration boards.  A  national  banking  law 
does  not  necessarily  create  national  banks. 
National  banks  exist  only  if  there  are 
enterprising  capitalists  who  desire  to 
organize  themselves  under  the  law.  For 
the  same  reason  a  law  permitting  the  exist- 
ence of  trade  unions  does  not  necessarily 
lead  to  their  formation.  No  unions  will  be 
formed,  unless  there  are  people  who  can 
command  the  intelligent  leadership  and 
interest  needed  to  organize  them.  The 
form,  too,  which  they  take  will  depend 
upon  the  national  character,  the  economic 
and  social  habits,  the  prejudices,  and  even 
theories  of  those  concerned.  Hence  we  see 
that  labor  unions  have  taken  one  form  in 

91 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

England,  but  quite  different  forms  in 
Germany,  in  France,  and  in  the  United 
States. 

In  distinguishing  these  three  types,  I  do 
not  mean  to  assert  that  they  are  always 
kept  perfectly  distinct  in  practice.  Labor 
legislation  sometimes  progresses  in  the 
accomplishment  of  a  certain  end  from  one 
type  to  the  other.  The  small  success 
of  voluntary  schemes  for  workingmen's 
insurance  led  the  German  government  to 
introduce  compulsory  insurance,  thus  pass- 
ing from  laws  of  the  third  type  to  those  of 
the  second.  As  regards  savings,  this 
matter  is  still  regulated  by  laws  of  the 
third  type  in  general,  but  some  economists 
are  now  advocating  compulsory  saving  as 
a  kind  of  insurance  against  unemployment. 
Like^\ise  the  limited  success  of  voluntary 
arbitration  boards  has  led  in  Australasia 
to  compulsory  arbitration.  In  still  other 
cases  two  methods  may  be  combined  in  a 
single  law.  Thus  in  the  Ghent  system  of 
insurance  against  unemployment,  there  is 
a  coercive  or  distributive  feature  in  that 
the  town  pays  out  of  the  proceeds  of  taxa- 
tion a  certain  sum  towards  the  allowance 
of  those  who  are  out  of  work,  but  it  pays 

92 


DISTINCTIONS  IN  LABOE  LEGISLATION 

this  in  most  cases  as  a  bonus,  added  to  the 
allowance  made  by  labor  organizations. 
It  thus  makes  use  of  the  methods  of  the 
second  class  to  encourage  institutions  of 
the  third. 


CHAPTER  VII 

Purposes  of  Labor  Legislation 

We  have  thus  far  distinguished  between 
different  types  of  legislation  \\ith  refer- 
ence to  the  way  in  which  it  operates  upon 
the  economic  processes.  If  we  now  look  at 
the  general  purpose  and  trend  of  such 
legislation,  we  shall  see  that  there  are  two 
main  purposes  which  are  not  necessarily 
antagonistic,  but  which  are  yet  distinct. 

The  first  purpose,  which  applies  to  all  of 
the  so-called  labor  protective  laws  and 
many  of  those  which  fall  in  the  other  two 
classes,  is  the  preservation  of  the  race  and 
maintenance  of  its  quality.  The  principal 
argument  for  protecting  children  and 
women  against  excessive  or  unhealthy 
work  is  that  the  next  generation  is  threat- 
ened. The  first  child  labor  laws  of  Prussia 
were  inspired  by  General  von  Horn,  who,  in 
1828,  called  the  king's  attention  to  the  diffi- 
culty of  getting  able-bodied  recruits  from 
the  manufacturing  districts  of  the  Rhine 
province.  This  same  purpose  applies  to 
many  other  types  of  legislation.  One  of 
the  strongest  arguments  for  workingmen's 

94 


PUEPOSES  OF  LABOE  LEGISLATION 

insurance  is  that  the  burden  which  falls 
upon  women  and  children  in  the  case  of 
industrial  accidents  or  disease  is  lightened, 
and  that  thus  the  succeeding  generation  is 
brought  up  under  more  wholesome  condi- 
tions. 

Quite  a  different  purpose  appears 
when  legislation  aims  to  influence  the 
distribution  of  wealth  between  different 
classes,  when  it  consciously  tries  to  raise 
the  level  of  the  wage-receiving  class  at  the 
expense  of  the  employers  or  of  the  com- 
munity at  large.  These  two  tendencies, 
which  are  really  quite  distinct,  are  often 
confused.  Many  people,  especially  those 
of  the  individualistic  school,  are  apt  to 
group  all  labor  legislation  together  as 
socialistic;  and  in  many  cases  the  very 
epithet,  in  the  mind  of  those  who  use  it,  is 
enough  to  condemn  the  movement.  This, 
however,  is  a  superficial  view.  Socialism 
is  not  the  only  antithesis  to  individualism. 
If  the  extreme  individualist  is  one  who 
believes  in  the  greatest  liberty  of  the  indi- 
vidual, he  may  be  restrained  either  in  the 
interest  of  his  contemporaries  or  in  the 
interest  of  his  successors.  The  motto  of 
the  individualist  who  disregards  the  inter- 

95 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

ests  of  his  contemporaries  is,  "The  public 
be  damned" ;  the  motto  of  the  individuahst 
who  disregards  the  interests  of  his  suc- 
cessors is,  "After  us  the  deluge."  Thus 
there  are  two  policies  opposed  to  indi- 
vidualism, one  of  which  takes  into  account 
contemporary  relations,  the  other  of  which 
considers  the  element  of  time.  Our  social 
world,  like  our  physical, 'is  a  world  of  three 
dimensions,  not  of  two.  From  one  point 
of  view  individualism  is  justly  contrasted 
with  collectivism  or  socialism.  From  the 
other  it  is  contrasted  with  a  movement 
which  is  in  reality  not  new,  but  which  is  as 
yet  so  little  conscious  of  itself  that  nobody 
has  apparently  thought  of  giving  it  a 
name.  If  we  may  be  permitted  to  borrow 
a  word  which  was,  I  believe,  first  coined  by 
Mr.  Louis  E.  Ehrich,  we  may  call  it  "pos- 
teritism."  This  movement  is  so  important 
for  the  welfare  and  the  permanent  strength 
of  any  society,  and  it  is  capable  of  so  many 
applications,  that  it  almost  implies  a  revo- 
lution in  our  social  ideals.  The  general 
care  for  the  life,  intelligence,  and  morals 
of  the  next  generation,  as  shown  in  labor 
laws,  in  the  steps  taken  for  the  preserva- 
tion of  the  national  health,  in  the  fight 

96 


PUKPOSES  OF  LABOR  LEGISLATION 

against  tuberculosis,  and  in  the  creation  of 
playgrounds  for  children,  is  but  part  of  a 
greater  movement  which  also  includes 
measures  for  preserving  our  forests  and 
our  mineral  resources,  for  draining  our 
swamps,  and  for  irrigating  our  deserts. 
Still  another  phase  of  it  is  seen  in  the  study 
of  eugenics  by  our  sociologists.  It  is  not 
difficult  to  interest  people  in  the  preserva- 
tion of  our  natural  resources,  but  those 
who  are  far-seeing  recognize  that  the  peo- 
ple who  inhabit  a  country  are  as  much  an 
asset  as  is  its  material  wealth.  Indeed,  one 
without  the  other  would  be  of  little  use. 
Protective  labor  legislation  forms,  there- 
fore, a  part,  but  a  very  important  part,  of 
the  general  movement  for  posteritism. 

Much  of  this  is  not  new.  England,  the 
states  of  continental  Europe,  and  many  of 
our  own  States  furnish  us  with  an  abun- 
dant experience  on  which  to  base  future 
action.  And  yet  the  matter  is  attended,  in 
the  United  States,  with  peculiar  difficulties 
which  are  partly  legal  and  institutional, 
partly  economic. 

The  legal  difficulties  arise  from  the  very 
framework  of  our  government.  We  have 
within   the   limits   of  the   United   States, 

97 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

excluding  Alaska  and  our  distant  depen- 
dencies, no  less  than  fifty-one  different 
legislative  bodies  which  have  the  power  to 
pass  laws  for  a  larger  or  smaller  territory. 
Our  country  presents  a  more  complex 
legislative  problem  than  all  the  states  of 
Europe  taken  together.  There  is,  it  is 
true,  no  lack  of  labor  legislation  in  the 
United  States.  During  the  year  1907  alone, 
no  less  than  405  measures  regarding  labor 
were  passed,  and  not  all  of  the  legislatures 
were  w^orking  that  year.^  But  though 
many  of  our  commonwealths  are  far  ad- 
vanced and  stand  on  a  par  with  the  best 
states  of  Europe  ^vith  regard  to  certain 
matters,  we  find  that  even  adequate  laws 
for  the  protection  of  the  labor  of  children 
are  still  lacking  in  many  of  the  States,  laws 
for  the  protection  of  the  labor  of  women 
are  often  subject  to  attack  and  nullification 
on  constitutional  grounds.  When  we  look 
at  the  administration  of  these  laws,  we  are 
obliged  to  confess  that  very  frequently 
they  are  not  executed  by  experts,  but  that 
the  poison  of  the  spoils  system  still  neutral- 
izes, in  far  too  many  cases,  the  good  that 
laws  might  other\\^se  accomplish. 

1  Mass.  Labur  Bull.,  March-April,  1908,  p.  69. 
98 


PURPOSES  OF  LABOE  LEGISLATION 

While  in  the  world  at  large  labor  legis- 
lation   has    already    passed    beyond    the 
national  stage  and  has  now  become  the 
subject  of  international  treaties,  we  are 
still  struggling  with  a  lack  of  uniformity 
both   in   lawgiving   and   in   law-enforcing 
within  the  limits  of  a  single  country.    We 
are  not  even  able  to  command  satisfactory 
information  with  regard  to  industrial  acci- 
dents or  industrial  diseases  in  order  to 
guide    future    legislation.      So    simple    a 
matter  as  the  registration  of  vital  statistics 
is  still  in  such  a  state  of  chaos  that  Con- 
gress   has    been    obliged    to    request    the 
States    to    introduce    registers    and    has 
ordered  a  model  law  drawn  up  for  their 
guidance.    If  we  look  at  the  matter  in  all 
frankness  we  must  acknowledge  that,  while 
our  industries  are  noted  throughout  the 
world  for  the  inventiveness,  the  mechanical 
skill,  the  business  talent  which  they  com- 
mand, and  while  we  have  every  reason  to 
be  proud  of  our  educational  system  and  of 
our    standing   in   international    relations, 
we  have  apparently  overlooked  the  art  of 
legislation.    The  great  mass  of  our  State 
legislators  have  had  no  previous  training 
in  the  study  of  lawmaking  and  law-enforc- 

99 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

ing.  We  prevent  them  from  becoming 
skilled  and  responsible  lawmakers  by  rota- 
tion in  office,  by  infrequent  sessions,  and 
by  constitutional  limitations.  The  instruc- 
tion which  they  receive  from  the  lobby  is 
often  effective,  but  one-sided,  since  it  is 
more  apt  to  show  them  what  is  for  their 
individual  interest  than  what  is  for  the 
interest  of  the  public,  present  and  future. 
There  are,  fortunately,  signs  of  improve- 
ment. Expert  commissions  are  being 
used  more  and  more.  The  development  of 
such  institutions  as  the  Legislative  Refer- 
ence Library  in  Wisconsin  is  doing  much 
to  educate  our  lawgivers.  But  the  fact  still 
remains  that,  of  all  the  industries  of  the 
United  States,  lawmaking  is  perhaps  the 
most  backward. 

There  are  also  economic  conditions 
which  have  made  it  peculiarly  difficult  to 
secure  intelligent  action  on  this  subject  in 
our  country.  The  exhibit  of  the  Pittsburgh 
Survey^  may  serve  as  an  instructive  object 

2  This  exhibit  was  opened  in  1908  to  show  graphically 
some  of  the  results  of  the  intensive  study  of  the  industries 
of  Pittsburgh,  which  was  undertaken  by  the  Eussell  Sage 
Foundation,  and  the  details  of  which  were  later  pub- 
lished in  a  series  of  volumes. 

100 


PUEPOSES  OP  LABOE  LEGISLATION 

lesson.  A  visitor  to  that  exhibit  sees,  as 
he  enters  the  staircase  hall  of  the  Carnegie 
Institute,  some  beautiful  frescoes  repre- 
senting the  industries  of  Pittsburgh  in 
their  power  and  energy.  As  he  ascends,  he 
sees  another  series  of  frescoes  represent- 
ing the  "ceaseless  movement  of  the  peo- 
ple," men,  women,  and  children  passing  on 
to  work  or  play.  It  is  true,  as  we  are 
informed,  that  these  figures  are  not  ideal- 
ized, but  it  is  also  true  that  the  artist  has 
shown  but  one  side  of  the  medal.  The 
assets  are  there,  but  where  are  the  liabili- 
ties? Where  is  the  depreciation  account? 
If  we  pass  into  the  room  occupied  by  the 
Pittsburgh  Survey,  we  see  another  frieze 
made  up  of  small  black  figures,  also  pass- 
ing in  an  endless  procession  around  the 
room.  Each  one  of  these  figures  stands 
for  one  of  the  622  deaths  from  typhoid 
fever  which  took  place  within  a  single  year. 
Each  one  of  them  represents  a  loss  of 
earning  power  to  the  families  and  a  loss 
to  the  community,  as  well  as  suffering  and 
weakness  for  those  concerned.  It  is  fair 
to  say  also  that  at  least  three-fourths  of 
these  were  preventable,  for  some  statistics 
placed  upon  the  wall  show  that,  after  the 

101 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

introduction  of  a  filtration  plant  in  the 
water  supply  of  Pittsburgh,  the  cases  of 
typhoid  fever  were  reduced  by  nearly 
three-fourths  in  the  course  of  a  year. 
Other  figures  show  the  deaths  by  accident, 
by  tuberculosis,  etc.  Why  is  it  that  the 
community  as  a  whole  permitted  this  waste 
of  human  life  to  go  on?  It  is  not  due  to 
lack  of  engineering  skill,  for  the  highest 
ingenuity  is  displayed  in  the  Pittsburgh 
mills.  Nor  is  it  due  to  lack  of  wealth,  or 
business  ability.  It  is  mainly  due  to  the 
fact  that  Pittsburgh,  like  the  country  as  a 
whole,  does  not  breed  its  own  workers.  A 
very  large  number  of  them  are  drawn  from 
abroad.  That  supply  keeps  on  coming  in 
spite  of  typhoid  fever  and  tuberculosis  and 
the  ten  thousand  annual  deaths  by  accident 
on  our  railroads.  A  factory  or  a  railroad 
must  allow  in  its  accounts  for  the  deterio- 
ration of  its  machinery,  or  it  will  soon  come 
to  grief.  But  the  United  States  is  like  a 
railroad  company  which  can  always  obtain 
new  locomotives  by  simply  paying  for  the 
expense  of  running  them.  Such  a  company 
could  well  afford  to  disregard  its  scrap 
heap.  But  the  human  scrap  heap  is  not  so 
easily  disposed  of.    The  premature  death 

103 


PUEPOSES  OF  LABOR  LEGISLATION 

of  a  worker  means  not  simply  the  elimina- 
tion from  the  industrial  world  of  another 
human  machine;  it  often  means  a  widow 
and  children  growing  up  in  a  state  of 
poverty  and  want,  it  means  a  weak  instead 
of  a  strong  worker  twenty  years  from 
now.  Whatever  the  industrial  structure  of 
society  may  be  at  that  time,  whether  capi- 
talistic or  socialistic  or  communistic,  that 
means  an  economic  loss.  The  action  taken 
by  us  of  the  present  generation  to  prevent 
that  loss  depends  upon  whether  our  social 
consciousness  is  able  to  project  itself  so 
far  into  the  future  as  to  be  influenced  by 
considerations  which  will  perhaps  never 
affect  us  personally.  Socialism  has  em- 
phasized the  injustice  of  many  of  our  social 
institutions.  Posteritism  points  out  our 
short-sightedness.  If  our  motto  is,  "After 
us  the  deluge,"  we  shall  certainly  take  no 
thought  for  the  morrow.  But  that  was  not 
the  point  of  view  of  the  founders  of  the 
Republic.  For  they  framed  the  Federal 
Constitution,  not  only  to  "establish  jus- 
tice," but  also  to  "secure  the  blessings  of 
liberty  to  ourselves  and  our  posterity." 


103 


CHAPTER  VIII 

Pkactical  Methods  in  Labok  Legislation 

Blackstone  says  that  three  things  are 
requisite  to  government;  wisdom,  good- 
ness, and  power,  and  of  these  three,  he 
thinks  that  democracies  are  more  likely  to 
have  goodness  than  either  of  the  other 
qualities,  while  in  aristocracies,  more  ms- 
dom  is  to  be  found.  A  cynic  might  prefer 
to  express  the  same  idea  negatively,  and 
to  say  that  democracies  have  even  less  wis- 
dom than  they  have  goodness,  and  aris- 
tocracies, even  less  goodness  than  msdom. 
Blackstone  certainly  does  not  entertain  a 
very  high  opinion  of  the  British  Parlia- 
ment of  his  day.  ''It  is  perfectly  amaz- 
ing," he  says,  ''that  there  should  be  no 
other  state  of  life,  no  other  occupation, 
art,  or  science,  in  which  some  method  of 
instruction  is  not  looked  upon  as  requisite, 
except  only  the  science  of  legislation,  the 
noblest  and  most  difficult  of  any."  Black- 
stone wrote  some  140  years  ago,  but  can 
we  truthfully  say  that  we  of  the  United 

104 


PEACTICAL  METHODS  IN  LABOE  LEGISLATION 

States  have  progressed  far  beyond  the 
state  of  things  then  described  by  him? 
How  many  of  our  State  or  even  national 
legislators  have  had  any  special  training 
in  the  art  of  lawmaking?  Even  when  they 
are  lawyers  by  profession,  they  have,  at 
best,  been  trained  in  what  the  law  is,  not 
in  what  it  ought  to  be,  and  the  science  of 
legislation  is  still  conspicuous  by  its 
absence  from  the  curricula  of  our  law 
schools.  Nor  do  we  give  our  legislators  as 
a  whole  the  benefit  of  such  rude  appren- 
ticeship as  they  may  gain  in  our  State 
Capitols.  A  large  fraction  of  those  who 
have  had  such  experience  are  annually  or 
biennially  retired  to  private  life  in  order 
to  make  room  for  others.  This  is  true  even 
in  the  state  which  is  known  as  the  "state 
of  steady  habits."  In  the  Assembly  of 
1909,  e.g.,  only  28  per  cent  of  the  members 
of  both  houses  had  had  any  previous  legis- 
lative experience  whatever.  Nearly  a 
third  of  them  were  farmers.  Now  farmers 
are  as  a  rule  estimable  men,  individually, 
but  they  do  not  often,  in  the  State  of  Con- 
necticut, find  enough  leisure  in  the  inter- 
vals of  coaxing  a  scanty  living  from  our 
stony  soil  to  devote  themselves  profoundly 

105 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

to  the  study  of  jurisprudence.  The  judi- 
ciary committee  is,  it  is  true,  always  com- 
posed of  lawyers;  but  it  is  rather  rare 
in  other  departments  of  lawmaking  to 
find  such  impartial  specialization  as  was 
applied  a  few  years  ago  to  the  make-up  of 
the  Committee  on  Public  Health,  when  two 
physicians  were  re-enforced  as  experts  by 
two  undertakers  and  a  grocer ! 

Thus  the  legislation  of  our  States,  which 
is  prodigious  in  its  mass,  amounting  easily 
in  a  single  year  to  16,000  enactments,  is 
mainly  the  product  of  unskilled  labor. 
Hence,  when  it  is  submitted  to  the  trained 
minds  of  our  courts,  it  is  not  surprising 
that  a  great  deal  of  it  is  condemned.  The 
result  is  that,  while  our  business  men, 
our  scientists,  our  professional  men,  our 
inventors,  our  philanthropists,  are  eagerly 
pressing  forward  to  conquer  new  fields,  a 
large  part  of  the  labor  of  our  trained 
jurists  seems  to  be  employed  in  putting  on 
the  brakes.  This  remark  must  not  be  taken 
to  imply  any  disrespect  for  the  mechanical 
virtues  of  the  brake.  We  need  it  in  all 
walks  of  life.  We  need  it  commercially 
and  socially  as  well  as  mechanically.  But 
if  you  apply  the  brakes  to  a  part  of  the 

106 


PEACTICAL  METHODS  IN  LABOE  LEGISLATION 

train  only,  while  the  locomotive  is  under 
full  steam,  something  is  sure  to  be  dis- 
located. 

This  is  precisely  what  happens,  when 
new  processes,  new  methods,  new  forms 
of  organization  are  introduced  into  our 
economic  life,  and  the  legal  machinery  for 
handling  them  is  blocked  in  its  develop- 
ment by  the  tardiness  or  weakness  or  care- 
lessness of  legislation.  This  is  what  hap- 
pens, when  we  try  by  all  means  to  stimulate 
our  industries,  but  fail  properly  to  protect 
children  and  women  from  the  effects  of 
long  hours,  or,  having  passed  a  law,  nullify 
it  as  contrary  to  the  constitution.  This  is 
the  case,  when  we  increase  the  hazards  of 
travel  and  of  manufacture  by  increasing 
the  speed,  or  of  coal  mining  by  working 
lower  levels,  and  yet  fail  to  require  ade- 
quate safety  appliances,  or  refuse  to  give 
to  the  individual  who  may  be  injured  as 
the  result  of  these  processes,  any  indem- 
nity, unless  he  is  able  to  prove,  by  an 
expensive  lawsuit,  not  only  that  someone 
was  to  blame,  but  that  that  person  was  not 
a  fellow  servant  of  his,  and  that  he  himself 
was  not  guilty  of  contributory  negligence. 
Yet  the  principle  of  averaging  the  property 

107 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

losses  of  a  dangerous  occupation  such  as 
navigation  is  as  old  as  the  Lex  Rhodia  de 
jactii.  If  it  is  in  the  interest  of  commerce 
to  apportion  among  the  shippers  the  loss 
which  arises  when  a  part  of  the  cargo  is 
jettisoned  to  save  the  ship,  is  it  not  equally 
in  the  interest  of  society  to  distribute  the 
loss  when  a  human  being  is  jettisoned  in 
the  dangerous  processes  of  modern  in- 
dustry? 

The  wastefulness  and  inequity  of  our 
present  system  is  at  last  coming  to  be 
recognized,  and  yet,  as  soon  as  we  speak 
of  substituting  a  better  one,  or  introducing 
anything  like  compulsory  insurance  or 
workmen's  compensation,  we  are  at  once 
met  with  the  bugaboo  of  unconstitution- 
ality, and  one  of  the  first  problems  of  the 
various  commissions  now  studying  this 
subject  is  to  steer  clear  of  this  ever-present 
danger  to  legislation.  This  is  not  the  place 
for  a  discussion  of  the  principles  of  con- 
stitutional law.  They  have  been  from  the 
beginning  of  our  history  the  perennial 
subject  of  debate  between  political  parties, 
and  it  is  more  than  probable  that  even 
experts  would  not  agree  in  their  solution 
of  all  of  the  questions  that  may  arise  in 

108 


PEACTICAL  METHODS  IN  LABOR  LEGISLATION 

this  connection.  There  are,  however,  a 
few  general  principles  of  interpretation 
that  should  be  emphasized.  One  is  that  a 
power  which  Congress  may  exercise  for  the 
benefit  of  property,  cannot  consistently  be 
denied  to  it,  when  it  attempts  to  exercise 
it  for  the  benefit  of  persons.  Thus,  if  we 
ask  Congress  to  impose  a  prohibitory  tax 
on  poisonous  matches  in  order  to  protect 
the  health  of  the  workers,  we  cannot  be 
charged  with  misusing  the  taxing  power  of 
the  government,  as  long  as  Congress  can 
impose  customs  duties,  in  order  to  benefit 
owners  of  mines  and  manufactories,  and 
can  tax  State  bank  notes,  in  order  to  give  a 
bank  note  monopoly  to  the  national  banks. 
"We  should  also  not  forget  that  all  of  our 
constitutions,  both  Federal  and  State, 
make  provisions  for  their  own  amendment, 
their  framers  thus  recognizing  that  a 
change  of  circumstances  might  require  a 
change  in  the  powers  and  duties  of  govern- 
ment. We  of  the  present  generation  are 
not  honoring  the  founders,  but  rather  dis- 
playing our  own  narrow-mindedness,  if  we 
refuse  in  the  name  of  constitutionalism  to 
make  use  of  the  power  of  amendment  which 
they  deliberately  conferred  upon  us.    Let 

109 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

US  not  forget  that  the  law  is  made  for  man 
and  not  man  for  the  law. 

It  is  true  that  every  law  which  affects 
economic  and  social  conditions  is  like  a 
piece  of  social  surgery.  It  may  cut  deeply 
into  the  very  arteries  of  industry;  it  may 
sever  the  nerves  of  trade  and  of  enterprise. 
The  recognition  of  this  fact  is  often  used 
as  an  argument  in  favor  of  laissez  faire. 
Rather  than  run  the  risk  of  doing  harm,  it 
is  better,  we  are  told,  not  to  do  anything 
at  all.  This  maxim  is  a  wT.se  one  in  a  cer- 
tain stage  of  development.  It  was  perhaps 
wise  in  surgery  before  the  discovery  of  the 
circulation  of  the  blood,  and  of  anaesthetics. 
But  increased  knowledge  has  made  surgery 
bold.  It  is  bold  because  it  is  instructed.  It 
is  precisely  because  the  modern  surgeon 
not  only  realizes  the  delicacy  of  the  human 
body,  but  also  understands  the  working  of 
its  different  parts,  that  he  can  perform 
with  confidence  operations  which  a  few 
years  ago  would  have  resulted  in  the  death 
of  the  patient. 

Legislation  is  just  beginning  to  pass  out 
of  the  primitive  stage  in  which  surgery 
found  itself  a  century  ago,  and  it  is  my 
present  purpose  to  try  to  point  out  the 

110 


PEACTICAL  METHODS  IN  LABOR  LEGISLATION 

method  by  which  its  work  may  become 
more  effective  and  less  dangerous.  While 
much  that  I  say  has  a  general  bearing  upon 
all  legislation,  I  shall,  of  course,  speak 
specifically  of  what  seem  to  me  some  of 
the  requisites  of  labor  legislation. 

The  first  thing  to  emphasize  is  that  every 
law  should  be  preceded  by  a  careful  inves- 
tigation of  the  facts,  economic,  industrial, 
and  medical.  Put  in  this  way,  the  state- 
ment may  seem  a  truism,  but  it  is  a  rule 
that  is  often  disregarded.  It  is,  moreover, 
a  rule  which  it  is  not  easy  to  carry  out  in 
our  country.  In  certain  lines  our  statistics 
are  full  and  trustworthy,  especially  the 
general  statistics  of  population,  collected 
for  the  decennial  census ;  but  our  vital  and 
accident  statistics  are  very  imperfect.  It 
is  clear  that  a  legislature  must  work  in  the 
dark  when  providing  against  accidents  and 
disease,  unless  it  knows  how  prevalent  they 
are.  Hence  the  Association  for  Labor 
Legislation  is  working  for  the  reporting 
of  industrial  diseases  by  physicians,  and 
for  fuller  records  of  industrial  accidents. 
It  has  also  appointed  a  committee  which  is 
urging  upon  Congress  the  importance  of 
a  national  investigation  of  industrial  dis- 

111 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

eases.  In  this  whole  matter  it  is  clear  that 
we  must  work  for  co-operation  between  the 
sciences,  especially  between  medicine  and 
hygiene,  on  the  one  hand,  and  economics, 
sociology  and  statistics,  on  the  other. 
Medical  science  has  made  marvellous  pro- 
gress of  late  years  in  its  own  field,  but  it  is 
only  just  beginning  to  realize  the  social 
side  of  its  work.  The  development  of  a 
social  service  department  in  the  Massa- 
chusetts General  Hospital  and  the  forma- 
tion of  a  society  for  the  study  of  medical 
sociology  in  New  York,  are  the  encourag- 
ing beginnings  of  what  we  may  hope  will 
prove  a  beneficent  and  fruitful  partnership 
between  the  sciences.  In  this  field  Italy 
has  set  us  a  splendid  example  by  the  foun- 
dation of  the  Hospital  for  Industrial  Dis- 
eases in  Milan.  This  institution  contains 
not  only  the  facilities  for  treating  such 
diseases,  but  also  laboratories  in  which 
they  can  be  studied,  and  measures  devised 
for  preventing  and  curing  them. 

Besides  the  vital  and  demographic  facts 
already  mentioned,  we  need  also  to  know  to 
what  extent  the  purpose  in  view  may 
already  have  been  attained  in  whole  or  in 
part    by    existing    agencies.      We    may 

112 


PEACTICAL  METHODS  IN  LABOE  LEGISLATION 

well  profit  by  the  example  of  Switzerland, 
which,  before  undertaking  to  introduce  sick 
insurance,  made  an  investigation  of  the 
work  of  the  benefit  societies.  This  careful 
statistical  study  showed  that  these  societies 
had  increased  rapidly  in  the  course  of  23 
years.  In  1880  they  insured  7  per  cent  of 
the  entire  population,  in  1903,  15  per  cent.^ 
This  is  clearly  a  fact  of  the  first  impor- 
tance, and  it  has  determined  the  entire  plan 
of  sick  insurance  in  Switzerland,  which, 
instead  of  creating  new  organs,  has  simply 
utilized  those  already  existing.  We  are 
informed  that  in  the  United  States  some 
8,000,000  adult  men  and  women  are  at  the 
present  day  insured  in  fraternal  orders  in 
addition  to  3,000,000  insured  by  other 
forms  of  benefit  societies,  such  as  railroad 
relief  funds,  trade  unions,  etc.  If  we 
assume  with  Dr.  Brodsky,^  that  each  of 
these  persons  represents  three  others,  we 
have  33,000,000  of  inhabitants,  or  a  third 

1 0.  H.  Jenny :  The  Problem  of  Sick  and  Accident 
Insurance  in  Switzerland,  Yale  Review,  November,  1910, 
p.  241. 

2  E.  J.  Brodsky:  Paper  read  at  the  National  Fraternal 
Congress,  National  Fraternal  Congress  Bulletin,  Novem- 
ber, 1910,  p.  2. 

113 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

of  our  entire  population,  benefited  by  these 
voluntary  associations. 

Almost  equally  important  is  the  study 
of  pre-existing  law,  and  above  all  of  the 
legislative  experience  both  of  our  own 
country  and  of  others.  Much  unnecessary 
legislation  is  enacted  annually  for  lack  of 
this  care.  Professor  Stimson  quotes,  as  an 
extreme  instance  of  it,  the  act  passed  by 
the  Legislature  of  Massachusetts,  some 
years  ago,  which  virtually  declared  that  the 
common  law  was  the  common  law  !^ 

It  should  be  our  purpose  to  enact  no 
unnecessary  law.  But  if  we  find  that,  after 
full  consideration,  there  is  an  evil  for 
which  the  existing  laws  do  not  supply  a 
remedy,  it  is  still  important  to  find  out 
w^hat  remedies  have  been  applied  by  other 
countries,  and  what  light  is  thrown  by 
experience  upon  the  operation  of  the  pro- 
posed legislation.  One  cannot  avoid  the 
feeling  that  when  the  British  Parliament 
passed  the  present  old  age  pension  act 
they  did  not  take  the  trouble  to  study  the 
German  system  of  old  age  insurance, 
based  upon  the  principle  of  contributions 

3F.  J.  Stimson:  Popular  Law-Making,  1910,  pp.  188 
and  357. 

114 


PRACTICAL  METHODS  IN  LABOR  LEGISLATION 

by  the  beneficiaries.  It  would  also  seem  as 
if  they  had  forgotten  their  own  unhappy 
experience  mth  the  lavish  system  of  poor 
relief  which  was  practiced  only  a  century 
ago,  and  which  proved  to  be  not  only  costly 
to  the  taxpayer,  but  most  demoralizing  to 
those  who  were  intended  to  be  benefited  by 
it. 

It  would  seem  superfluous  to  mention  the 
importance  of  careful  drafting,  were  it  not 
so  often  disregarded  in  practice.  Any- 
body who  expresses  himself  as  opposed  to 
stealing  is  liable  in  these  days  to  be 
charged  ^vith  lack  of  originality,  and  to  be 
reminded  that  he  is  simply  plagiarizing  one 
of  the  Ten  Commandments.  Likewise  a 
person  who  maintains  that  a  law  should 
state  the  intention  of  the  legislator,  and 
that  it  should  be  so  clear  that  it  not  only 
can  be  understood,  but  that  it  cannot  be 
misunderstood,  is  liable  to  be  reminded 
that  very  much  the  same  thing  was  said  by 
Quintilian  nearly  two  thousand  years  ago. 
But  as  long  as  people  persist  in  violating 
these  fundamental  rules,  not  merely  of  law 
but  of  language,  so  long  will  it  be  neces- 
sary to  lay  stress  upon  them.  Thus,  not 
long  ago  in  one  of  the  New  England  States, 

115 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

a  legislator  undertook  to  change  the  dates 
of  the  appointment  to  office  of  the  members 
of  a  certain  city  commission.  When  the 
legislature  had  adjourned  and  the  amend- 
ment was  printed,  it  was  discovered  that, 
while  the  law  distinctly  stated  that  there 
should  be  three  commissioners,  the  dates 
were  so  fixed  that  the  law  could  not  be 
complied  mth  without  the  appointment  of 
four.  A  western  State,  which  has  in  gen- 
eral a  well-deserved  reputation  for  care  in 
drafting,  passed  a  tenement-house  act 
some  years  ago,  which  the  Supreme  Court 
of  the  State  declared  impossible  of  execu- 
tion. The  principal  reason  was  that  it  was 
made  so  general  as  to  require  in  country 
districts  certain  appliances  which  could  be 
found  only  in  cities.  So  flagrant  are  the 
violations  of  this  fundamental  rule  of  writ- 
ing that  some  public-spirited  citizens  have 
recently  organized  a  society  whose  sole 
purpose  is  to  attend  to  the  careful  drafting 
of  laws. 

It  goes  without  saying  that  the  best  law 
is  futile  without  some  provision  for  its 
execution.  Labor  laws  are  seldom  self- 
executory.  Factory  acts  involve  more  or 
less  inspection  of  establishments  which  the 

116 


PEACTICAL  METHODS  IN  LABOE  LEGISLATION 

owners  and  managers  do  not  always  wel- 
come. The  factory  inspector  must  possess 
not  only  honesty  but  also  technical  knowl- 
edge, firmness,  and  tact.  Yet  it  is  notori- 
ous that  in  a  large  number,  probably  the 
majority,  of  our  States,  these  important 
officers  are  appointed,  not  on  account  of 
their  qualifications  for  the  duties  of  their 
office,  but  because  they  have  earned  the 
gratitude  of  the  appointing  power  by 
political  services.  Such  men  can  hardly  be 
expected  to  jeopardize  their  reappointment 
by  an  unpopular  severity  in  the  enforce- 
ment of  the  law.  The  Association  for 
Labor  Legislation  has  published  a  special 
study  of  the  administration  of  labor  laws 
from  which  it  appears  that  only  three  of 
all  our  States  require  a  civil  service  exami- 
nation for  factory  inspectors.  A  few 
require  the  appointment  of  "a  suitable 
person"  or  "a  competent  and  practical 
mechanic."  Most  of  them  place  no  limita- 
tions whatever  upon  the  appointment.  The 
International  Association  for  Labor  Legis- 
lation is  making  a  similar  study  of  the 
administration  of  labor  laws  throughout 
the  world,  and  a  comparison  of  the  best- 
administered  state  of  Europe  with  our  own 

117 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

is  not  flattering  to  our  vanity.  Prussia, 
e.g.,  goes  so  far  as  to  require  of  its  factory 
inspectors  three  years'  technical  study  in 
such  subjects  as  chemistry  and  mechanics 
and,  in  addition,  one  and  one-half  years' 
study  of  economics  and  public  law.  They 
must  also  pass  two  examinations  in  a  Ger- 
man university.  Such  extreme  require- 
ments would  be  plainly  impossible  in  our 
country  and  perhaps  undesirable,  but  they 
at  least  show  how  seriously  the  Prussian 
legislators  take  their  labor  laws. 

A  final  requirement,  which  I  should  like 
to  emphasize,  is  seldom  recognized,  and 
yet  it  is,  in  my  judgment,  of  great  impor- 
tance. Every  labor  law  should  provide  for 
a  record  of  its  own  operations.  No  hospi- 
tal would  be  considered  worthy  of  support, 
if  it  did  not  keep  a  careful  record  of  cases, 
yet  our  legislators  are  willing  to  project 
into  the  economic  life  of  society  a  great 
power,  namely,  the  power  of  coercing  indi- 
viduals, without  even  taking  the  trouble 
to  find  out  how  this  power  is  operating. 

A  few  years  ago  one  of  our  graduate 
students  was  working  up  a  study  of  the 
factory  laws  of  one  of  our  States,  and  all 
of  the  printed  statistics  were  in  such  an 

118 


PEACTICAL  METHODS  IN  LABOR  LEGISLATION 

unsatisfactory  shape  that  he  was  actually 
obliged  to  organize  a  small  statistical 
bureau  in  order  to  make  the  calculations 
needed  for  a  comparison  of  the  figures 
from  year  to  year. 

I  have  intentionally  omitted  all  refer- 
ence here  to  one  topic  which  may  seem  to 
many  the  most  important  of  all.  I  refer 
to  the  methods  by  which,  when  a  bill  is  pre- 
pared, the  favorable  votes  of  the  legisla- 
tors may  be  obtained.  It  is  clear  that  laws 
which  are  stillborn  are  no  laws  at  all,  but 
the  art  of  legislative  midwifery  is  precisely 
that  part  of  the  art  of  legislation  which  has 
enjoyed  a  really  professional  development 
in  our  country.  Legislators  come  and 
legislators  go,  but  the  lobby  seems  to  be 
the  one  stable  element  in  our  legislative 
halls.  The  Association  for  Labor  Legisla- 
tion does  not  expect,  nor  does  it  desire,  to 
add  to  the  world's  knowledge  of  this  sub- 
ject, though  its  members  may  need  to  be 
reminded,  and  reminded  emphatically,  that 
since  this  art  has  been  developed  in  the 
service  of  private  interests,  those  who  aim 
at  the  public  interest  are  under  a  peculiar 
obligation  to  study  and  apply  its  legitimate 
features. 

119 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

The  International  Association  for  Labor 
Legislation  exemplifies  in  its  business 
methods  the  application  of  these  practical 
principles.  At  the  meeting  held  in  1910  in 
Lugano,  the  delegates  divided  themselves 
at  once  into  five  commissions.  Each  of 
these  commissions  had  a  certain  set  of 
topics  to  discuss.  The  work  had  been  pre- 
pared beforehand.  One  of  the  important 
subjects  was  that  of  industrial  poisons, 
such  as  lead,  mercury,  etc.  The  association 
had  secured  the  preparation  of  an  elabor- 
ate list  of  industrial  poisons,  together  with 
statements  regarding  the  symptoms  pro- 
duced by  them  and  the  methods  of  treat- 
ment. This  list,  prepared  by  Professor 
Sommerfeld  of  Berlin,  had  been  subjected 
to  a  careful  revision  by  Dr.  Fischer.  Simi- 
lar studies  had  been  made  ^vith  regard  to 
other  topics,  such  as  the  hours  of  work  in 
continuous  industries,  etc.  A  study  of  the 
enforcement  of  labor  laws  in  the  leading 
countries  of  the  world  has  been  begun  and 
published  in  part.  In  order  to  secure  a 
much-needed  uniformity,  one  commission 
worked  out  a  definition  of  the  term  eight- 
hour  shift  as  applied  to  coal  mining.  The 
Bidletin  issued  periodically  by  the  asso- 

120 


PEACTICAL  METHODS  IN  LABOR  LEGISLATION 

elation  gives  a  survey  of  the  labor  legisla- 
tion of  the  world. 

It  is  by  such  careful  preparation  that 
the  work  of  the  International  Association 
is  made  effective,  and  it  is  by  the  same  kind 
of  work  that  the  American  Association 
must  justify  its  existence.  In  other  words, 
we  try  to  apply  to  legislation  the  same 
study  of  causes,  of  processes,  and  of  effects, 
that  lies  at  the  basis  of  our  modern  science. 
We  aim  to  utilize  in  our  lawmaking  the  best 
results  of  the  work  done  in  medicine, 
hygiene,  economics,  sociology,  and  juris- 
prudence. We  offer  no  single,  simple 
remedy  for  our  social  ills.  Social  panaceas 
we  put  in  the  same  class  with  the  philoso- 
pher's stone  and  the  dreams  of  the 
alchemist.  Avoiding  indifference  on  the  one 
hand  and  sensationalism  on  the  other,  we 
aim  to  secure  practical  results  by  scientific 
methods. 


121 


CHAPTER  IX 

ACATALLACTIC  FaCTOES  IN  DISTRIBUTION 

The  economist  who  received  his  notions 
of  the  science  thirty  or  forty  years  ago 
through  the  medium  of  the  standard  text- 
books must  look  back  with  a  certain  regret 
upon  a  time  when  economic  processes  were 
so  alluringly  simple.  There  were  three 
main  factors  in  production,  land,  labor,  and 
capital,  with  business  direction  as  a  possi- 
ble fourth.  The  landlord  received  rent,  the 
laborer  wages,  the  capitalist  interest,  and 
the  manager  profits.  The  product  was  con- 
ceived as  being  distributed  among  these 
four  groups  according  to  the  harmonious 
action  of  self-interest,  working  through 
the  processes  of  bargaining.  Indeed, 
wages  were  often  regarded  as  a  simple 
quotient,  obtained  by  dividing  the  wage 
fund  hy  the  working  population,  hence,  like 
other  quotients,  it  could  be  raised  only  by 
increasing  the  dividend  or  decreasing  the 
divisor. 

The  more  intensive  study  of  economic 
facts  and  economic  history  which  has  taken 
place  in  recent  years  has,  however,  shown 

122 


ACATALLACTIC  FACTORS  IN  DISTRIBUTION 

US  that  things  are  not  really  as  simple  as 
they  were  assumed  to  be.  The  production 
and  distribution  of  wealth  are  influenced 
by  many  forces  which  are  not  economic  in 
the  usual  acceptance  of  the  term.  Econom- 
ics still  lacks  a  suitable  term  to  express 
collectively  those  processes  which  are  not 
based  upon  free  exchange,  but  inasmuch 
as  the  term  catallactics  has  been  applied 
by  Wliateley  to  the  science  of  exchanges  in 
the  narrower  sense  of  the  word,  the  term 
acatallactic  would  naturally  describe  those 
economic  processes  in  which  exchange  is 
lacking. 

Not  only  is  there  a  great  deal  of  distri- 
bution which  takes  place  without  reference 
to  the  law  of  supply  and  demand,  but  a 
careful  study  of  economic  life  in  different 
countries  shows  us  that  the  three  elements 
into  which  the  national  production  is 
usually  divided  by  economists  have  by  no 
means  a  perfectly  fixed  connotation.  Each 
of  the  terms,  rent,  wages,  and  interest,  may 
mean  different  things,  according  to  the 
form  in  which  law  or  custom  has  cast  them 
and  according  to  the  limitations  under 
which  they  exist.  Let  us  consider  a  few  of 
the  more  important  cases  in  which  eco- 

123 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

nomic  processes  may  be  influenced  or  modi- 
fied by  other,  especially  legal  or  institu- 
tional, factors. 

1.  Much  of  the  distribution  of  wealth 
does  not  take  place  under  the  operation  of 
strictly  economic  forces  at  all,  if  we  under- 
stand by  them  the  free  play  of  self-interest 
working  through  supply  and  demand.  For 
example,  the  transfer  of  wealth  from  one 
generation  to  another  is  practically  never 
made  in  this  way.  In  rare  cases  it  may 
happen  that  a  person  will  buy  a  life 
annuity  of  an  insurance  company,  in  which 
case  the  transfer  does  take  place  through 
an  exchange  of  rights.  But  generally  it  is 
gratuitous,  determined  by  the  mil,  some- 
times the  whim,  of  a  testator,  sometimes 
by  the  dictum  of  law  in  the  case  of  intes- 
tacy, and  always  under  the  regulation  of 
law,  which  sets  limitations  on  the  whims  of 
testators  and  either  prevents  certain  dis- 
positions, such  as  entails,  as  a  matter  of 
public  policy,  or  enforces  certain  others  in 
the  interest  of  heirs.  Much  wealth  is  also 
transferred  by  marriage,  by  gifts  to  chil- 
dren, relatives  and  others.  All  of  these 
taken  together  are  important  causes  of  the 
unequal  distribution  of  wealth  which  have 

124 


ACATALLACTIC  FACTOES  IN  DISTEIBUTION 

nothing  to  do  with  the  play  of  economic 
forces  as  ordinarily  understood. 

Even  in  business  much  goes  by  favor, 
sometimes  degenerating  into  "graft." 
The  line  between  the  two  is  variable  and 
depends  upon  shifting  ethical  and  legal 
restrictions.  The  salaries  paid  to  officers 
of  large  corporations,  as  disclosed  in  the 
insurance  investigations  of  New  York,  are 
sometimes  determined,  not  by  supply  and 
demand  or  the  market  price  of  their  ser- 
vices, but  by  the  willingness  of  persons 
controlling  a  corporation  to  vote  them- 
selves large  salaries.  What  a  few  years 
ago  was  considered  a  legitimate  perquisite 
is  now  treated  as  illicit  and  condemned 
by  public  opinion.  The  ability  which  the 
managers  of  great  enterprises  have  to 
show  their  friends  special  favors  is  another 
instance  of  the  distribution  of  wealth  by 
other  than  economic  processes.  A  railroad 
president  who  should  supply  his  friends 
with  coal  out  of  the  coal  pockets  of  his 
company  would  doubtless  be  subjected  to 
criticism.  Yet  that  same  president  will 
give  a  free  pass,  which  means  coal  trans- 
formed by  combustion  into  motion,  with 
apparent  unconsciousness  that  he  is  giving 

125 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

away  the  stockholders'  property.  Manu- 
facturers who  would  scorn  to  ask  the  gov- 
ernment to  give  them  presents  from  funds 
raised  by  taxation,  will  besiege  Congress 
for  tariff  duties  which  allow  them  to  tax 
their  fellow  citizens  indirectly.  More  and 
more,  however,  either  the  law  or  public 
opinion  is  setting  limits  and  raising  the 
standard. 

2.  Even  where  the  law  of  supply  and 
demand  has  sway,  there  are  often  limita- 
tions placed  upon  its  unlimited  action  by 
ethical  standards,  or  by  law.  Let  us  take 
a  few  random  examples. 

a.  The  rate  of  interest  in  Wall  Street 
is  practically  free  in  spite  of  usury  laws, 
yet  the  exaction  of  a  high  rate  of  interest 
on  the  security  of  salaries  is,  as  shown  in 
the  investigation  by  the  Sage  Foundation 
of  the  salary  loan  business,  considered  a 
shady  occupation. 

b.  In  the  determination  of  rent  we  find 
occasional  instances,  as  seen  in  the  estab- 
lishment of  the  City  and  Suburban  Homes 
Company,  where  owners  of  property  delib- 
erately restrict  themselves  to  a  certain 
income.  There  is,  of  course,  a  philan- 
thropic element  here,  but  the  point  to  be 

126 


ACATALLACTIC  FACTORS  IN  DISTRIBUTION 

brought  out  is  precisely  that  here  philan- 
thropy does  enter  into  business. 

c.  The  buying  and  selling  of  the  pro- 
duct of  the  mind  is  always,  and  of  neces- 
sity, dependent  upon  law.  The  property 
right  in  a  book  or  an  invention  could  not  be 
enforced  without  a  law  determining  the 
conditions.  But  many  ideas,  often  most 
valuable  ones,  are  handed  down  as  a  tradi- 
tion from  one  generation  to  another,  and 
often  the  ingenious  inventor  of  a  machine 
or  process  voluntarily  relinquishes  the 
right  which  the  law  would  allow  him,  as  in 
the  case  of  the  Babcock  tester. 

d.  Profits  are  often  limited  by  public 
opinion  or  law.  This  sometimes  takes  the 
indirect  form  of  an  increased  capital 
expenditure.  Let  us  suppose,  e.g.,  that  a 
certain  enterprise  yields  a  net  income  of 
$50,000  a  year  and  that  the  investment  of 
$1,000,000  is  sufficient  to  do  the  business. 
In  this  case  the  dividend  might  be  5  per 
cent.  It  is  possible,  however,  that  the 
directors  might  vote  to  expend  an  addi- 
tional $250,000  for  beauty  or  ornamenta- 
tion, in  which  case  the  stockholders  could 
get  but  4  per  cent.  The  railroad  companies 
are   slowly   recognizing   a   certain   moral 

127 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

obligation  to  build  handsome  railway  sta- 
tions in  order  to  satisfy  the  public.  They 
probably  do  not  increase  the  traffic,  and 
at  best  aid  the  finances  of  the  company 
indirectly  by  making  hostile  legislation  less 
likely.  As  far  as  it  goes,  this  expenditure 
represents,  therefore,  a  deliberate  restric- 
tion of  profits  in  the  interest  of  the  public. 
The  difference  between  the  railroads  here 
and  in  countries  like  Germany  or  S^vitzer- 
land,  where  they  are  under  government 
control,  illustrates  this  point.  A  great 
deal  is  spent  in  our  country  on  luxuries, 
such  as  parlor  cars,  sleeping  cars,  etc.,  for 
which  a  direct  charge  can  be  made,  but 
comparatively  little  on  the  convenience  or 
beauty  of  railway  stations,  on  which  no 
direct  toll  can  be  levied.  In  Germany  and 
Switzerland  it  is  the  other  way.  The  trains 
are  not,  as  a  rule,  as  luxuriously  equipped, 
but  the  railway  stations  are  better  planned 
and  more  ornamental.  It  is  comparatively 
rare  for  a  manufacturing  concern  in  our 
country  to  regard  the  aesthetic  element  in 
constructing  its  buildings,  but  even  here, 
where  a  factory  is  the  dominating  industry 
of  a  small  town,  money  is  sometimes  spent 
on  architecture  or  grounds,  and  to  that 

128 


ACATALLACTIC  FACTORS  IN  DISTRIBUTION 

extent  it  may  be  said  that  profits  are 
deliberately  relinquished  in  the  interest  of 
the  general  public.  A  corporation  desiring 
new  stock  may  in  many  States  issue  it  at 
par  to  its  stockholders,  though  the  market 
price  may  be  150  or  200.  In  Massachusetts 
the  law  forces  public  service  corporations 
to  issue  the  stock  at  a  price  determined  by 
a  State  commission.  But  occasionally  in 
other  States,  corporations,  when  increas- 
ing their  stock,  offer  it  at  a  price  above  par 
without  compulsion  of  law.  These  illus- 
trations show  that,  whether  under  pressure 
of  law,  or  of  public  opinion,  or  from  far- 
sightedness, public  service  corporations 
are  feeling  a  certain  obligation  to  restrict 
their  profits,  which  doubtless  meajis  a  tacit 
recognition  that  some  of  the  income  is  due 
to  the  environment  and  should,  therefore, 
be  shared  with  the  general  public. 

e.  In  the  determination  of  the  price 
paid  for  services  there  is  a  great  deal  of 
confusion.  Supply  and  demand  hold  sway, 
doubtless,  with  regard  to  the  great  mass  of 
services  which  are  paid  for  under  the  name 
of  wages.  Yet  even  here  there  is  probably 
a  practical  minimum  determined  by  cus- 
tom.    Most   people,   e.g.,   would  hesitate, 

129 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

even  in  hard  times,  to  offer  to  employ 
people  at  half  the  customary  rate  of  wages, 
though  it  might  be  for  the  immediate  bene- 
fit of  the  worker  to  take  this  low  rate  rather 
than  earn  nothing.  With  regard  to  the 
more  skilled  services  of  the  professions 
there  are  often  curious  contrasts.  Most 
physicians,  e.g.,  have  a  fixed  charge  per 
visit,  whether  the  patient  be  rich  or  poor. 
In  the  case  of  surgeons,  however,  it  is  very 
common  to  fix  the  compensation  by  indi- 
vidual rather  than  by  group  bargaining, 
and  literally  to  charge  what  the  traffic  will 
bear.  The  multimillionaire,  simply  by  vir- 
tue of  his  wealth,  will  ask  free  transporta- 
tion and  other  favors  from  a  railroad,  but 
on  the  otter  hand,  if  his  appendix  is  out  of 
order,  he  will  find  that  it  costs  much  more 
to  remove  a  multimillionaire  appendix  than 
an  ordinary  one. 

3.  Quite  apart  from  limitations  created 
by  law,  or  custom,  or  ethical  standards,  we 
are  learning  that  the  actual  working  of  the 
machinery  of  production  often  depends 
upon  the  legal  form  which  the  contract 
takes.    Let  us  consider — 

a.  The  forms  of  capital  contract.  The 
capital  for  large  enterprises  is  generally 

130 


ACATALLACTIC  FACTORS  IN  DISTRIBUTION 

obtained  at  the  present  time  through  some 
kind  of  a  joint  stock  company.  But  here 
again  we  have  a  great  variety  in  the  con- 
ditions under  which  the  capital  is  suppUed. 
The  stockholders  are  nominally  the  owners 
and,  therefore,  have  the  control  of  the 
property.  And  yet  even  among  them  there 
are  differences  between  the  common  and 
preferred  stock,  both  as  regards  income 
and  control.  The  writer  happened  to  get 
some  of  the  preferred  stock  of  a  certain 
corporation  a  few  years  ago,  the  common 
stock  of  which  was  worth  very  little.  It 
turned  out,  however,  that  under  the  charter 
the  common  stock  was  given  the  right  to 
vote  after  a  certain  number  of  years.  It 
thus  became  possible  for  some  clever  peo- 
ple to  buy  up  the  common  stock  for  a  mere 
song  and,  by  means  of  the  voting  power,  to 
virtually  force  the  real  owners  of  the  com- 
pany to  buy  them  out.  This  form  of  capi- 
tal contract  is  calculated  to  encourage 
trickery  and  discourage  careful  business 
management.  An  illustration  of  the  oppo- 
site is  furnished  by  the  experience  of  two 
of  the  smaller  commonwealths  of  Europe. 
The  prosperity  of  the  Island  of  Guernsey 
is  attributed  to  a  considerable  extent  to  a 

131 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

form  of  loan  upon  real  property,  known  by 
the  French  term  rented  This  is  virtually 
a  mortgage  which  cannot  be  foreclosed,  as 
long  as  the  borrower  pays  his  interest,  so 
that  the  interest  becomes  a  fixed  charge, 
and  the  profits  all  go  to  the  worker.  It  is 
said  that  many  people,  starting  without 
property,  have  through  this  form  of  loan 
become  prosperous  farmers.  It  is  inter- 
esting to  note  that  the  new  Swiss  Civil 
Code,  which  has  recently  been  adopted  by 
the  Swiss  Confederation,  provides  for  a 
form  of  loan  on  land  known  as  the  Giilt. 
The  institution  is  very  similar  to  the  rente 
of  the  Island  of  Guernsey,  and  it  is  said 
that  it  was  introduced  into  the  Civil 
Code  of  the  Confederation,  because  it  had 
worked  so  advantageously  in  some  of  the 
smaller  cantons. 

b.  When  we  come  to  the  relations  of 
labor  to  the  employer,  the  variety  is  still 
greater.  Even  under  slavery,  which  may 
be  based  upon  contract  as  well  as  upon 
force,  we  have  many  modifications  of,  and 
many  degrees  in,  unfreedom,  such  as  serf- 
dom, peonage,  the  indenture  system.    Even 

1  II.  Eider  Haggard :  Eural  England,  Vol.  I,  1902,  pp. 
79-83. 

132 


ACATALLACTIC  FACTORS  IN  DISTRIBUTION 

when  slavery,  pure  and  simple,  is  the  rule, 
there  may  be  a  limitation  like  the  coarta- 
cion,  which  prevailed  under  the  Spaniards 
in  Cuba,  and  according  to  which  a  slave 
might,  by  paying  a  part  of  his  own  value  to 
his  master,  legally  limit  his  master's  prop- 
erty right  and  make  it  more  easy  to  secure 
freedom.^ 

The  wage  system  itself  permits  of  an 
indefinite  number  of  variants.  Some  years 
ago  David  Schloss  enumerated,  without 
exhausting  the  subject,  nine  different  kinds 
of  wage  contracts  which  were  common  in 
England.  In  certain  occupations  where 
gratuities  are  customary,  the  gratuities 
may  themselves  not  only  constitute  the 
entire  income  of  the  employee,  but  be 
so  large  that  he  can  afford  to  pay  his 
employer  for  the  privilege  of  working  for 
him.  This  represents  one  extreme.  A  good 
historical  example  of  the  other  extreme  is 
the  wage  contract  made  between  Laban 
and  Jacob,  when  the  latter  agreed  to  work 
seven  years  for  the  former  in  order  to  get 
a  wife,  and  then  received  an  inferior  arti- 
cle in  payment,  so  that  he  had  to  work 

2  Hubert  H.  S.  Aimes:  Coartaci6n,  Yale  ^Review,  Feb- 
ruary, 1909,  pp.  412-431. 

133 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

seven  years  more  to  secure  what  he  had 
contracted  for  in  the  beginning.  Besides 
the  indefinite  number  of  possible  wage  con- 
tracts which  lie  between  these  extremes, 
we  find  that  in  many  countries  certain 
terms  are  read  into  the  contract  by  law. 
This  is  especially  the  case  in  countries  like 
Germany,  which  since  1884  has  provided 
compulsory  insurance  for  certain  classes 
of  workers.  This  idea  has  spread  so  far, 
that  more  than  half  of  the  population  of 
continental  Europe  west  of  Russia  is  now 
living  under  laws  which  provide  more  or 
less  in  the  way  of  compulsory  insurance. 
The  older  wage  contract  may  be  considered 
as  in  a  broad  sense  an  insurance  contract, 
in  so  far  as  the  wage  receiver,  by  drawing 
a  stipulated  income,  is  insured  against  the 
chances  of  loss  in  the  business  as  a  whole, 
and  this  principle  is  confirmed  by  laws 
which,  like  labor  lien  laws,  give  the  wage 
receiver  a  preferred  claim  upon  the  prop- 
erty of  the  employer.  Compulsory  insur- 
ance against  accident,  sickness,  and  inva- 
lidity goes  a  step  further  and  insures  the 
laborer  against  loss  of  his  own  working 
power.  In  still  other  cases  the  law  may 
intervene,  not  simply  to  add  compulsory 

134 


ACATALLACTIC  FACTORS  IN  DISTRIBUTION 

stipulations  to  the  simple  contract,  but  to 
determine  the  terms  of  that  contract,  or 
the  methods  of  making  it,  with  a  view 
either  to  securing  what  is  supposed  to  be 
an  equitable  rate  of  compensation  or  to 
preventing  disputes.  The  Wages  Boards 
and  Compulsory  Arbitration  systems  of 
Australia  and  New  Zealand  are  instances 
of  this.  Even  a  purely  mechanical  device 
like  the  taximeter  may  be  the  means  of 
avoiding  disputes  and  save  the  wear  and 
tear  of  bargaining.  Whether  all  or  any  of 
these  devices  are  commendable  or  not,  is 
not  to  be  discussed  here.  They  are  men- 
tioned merely  to  show  the  great  extent  to 
which  the  complete  freedom  of  contract  is 
hedged  about  by  law,  for  the  purpose  of 
preventing  certain  definite  evils  which 
have  shown  themselves  in  the  modern 
industrial  world.  These  laws  do  not  abro- 
gate competition.  Supply  and  demand  are 
still  active.  Both  parties  are  still  striving 
to  get  as  much  as  they  can  for  what  they 
give  in  return.  But  the  laws  do  define  the 
limits  within  which  this  competition  is 
obliged  to  act.  This  function  of  law  may 
be  compared  to  the  effect  of  the  channel  on 
the  character  of  a  river.    One  and  the  same 

135 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

force  impels  Niagara  and  Meander.  But 
whether  this  force  of  gravity  produces  a 
sluggish  stream,  foaming  rapids,  or  a  sheer 
waterfall,  depends  upon  the  bed  through 
which  the  water  moves.  The  legal  forms  of 
the  wage  contract  are  the  bed  on  which 
supply  and  demand  act,  and  whether  eco- 
nomic processes  shall  be  quiet  or  turbulent, 
productive  or  inefficient,  depends  in  part 
upon  the  legal  channel  to  which  they  are 
forced  to  confine  themselves. 

The  great  variety  in  wage  contracts 
already  mentioned  and  the  eiforts  which 
are  made,  not  only  by  law  but  also  by  em- 
ployers on  their  own  initiative,  to  improve 
the  relations  of  capital  and  labor,  show 
that  the  industrial  world  is  feeling  around 
for  a  method  of  diminishing  the  evils 
which  have  shown  themselves  in  connection 
vdth  the  wonderful  productive  efficiency  of 
the  past  century.  Some  of  these  efforts 
have  proved  abortive,  as  is  seen  so  often  in 
the  history  of  productive  co-operation  and 
profit  sharing.  Others  contain  an  element 
of  paternalism,  which  often  introduces  new 
difficulties  while  removing  some  of  the  old 
ones.  Among  these  various  experiments 
there  is  one  which  is  so  remarkable,  not 

136 


ACATALLACTIC  FACTOES  IN  DISTEIBUTION 

only  for  the  careful  manner  in  which  all  of 
its  provisions  have  been  elaborated,  but 
still  more  for  the  motive  and  theory  which 
have  inspired  the  inventor,  that  it  deserves 
a  brief  description.  This  will  be  presented 
in  the  following  chapter,  not  with  the  idea 
that  a  complete  solution  has  been  found 
here  for  the  labor  problem.  Too  short  a 
time  has  elapsed  since  its  introduction  to 
warrant  any  final  conclusion,  favorable  or 
unfavorable,  regarding  its  merits,  and  the 
writer  is  of  the  opinion  that  many  of  its 
features  would  be  impossible  in  other 
industries  or  under  other  circumstances. 
It  is  believed,  however,  that  an  explanation 
of  its  character  cannot  fail  to  be  instructive 
to  all  who  are  seeking  tentatively  to  im- 
prove conditions,  and  it  is  particularly 
valuable  as  an  illustration  of  the  ways  in 
which  the  relations,  both  of  labor  and  of 
capital,  to  an  industrial  organization  may 
be  modified  for  social  purposes. 


137 


CHAPTER  X 

A  Socialized  Business  Enterprise^ 

In  the  year  1846,  a  young  mechanic 
named  Carl  Zeiss  established  a  workshop 
for  making  scientific  instruments  in  Jena. 
The  founder  of  this  simple  business  was 
born  in  1816,  in  Weimar,  and  was  the  son 
of  a  toy  merchant,  who  incidentally  had 
been  the  instructor  of  the  Grand  Duke, 
Karl  Friedrich,  in  the  art  of  lathe  turning. 
The  son  had  studied  in  the  gjTiinasium  and 
had  then  learned  mechanics  in  several 
workshops  before  he  established  himself 
in  Jena.  The  business,  although  very 
small,  was  a  success  from  the  start.    Sim- 

1  Acknowledgment  for  the  facts  stated  in  this  article 
regarding  the  Zeiss  establishment  is  hereby  made  to 
Professors  Felix  Auerbach  and  Julius  Pierstorff  and  to 
Dr.  Fr.  Schomerus,  who  very  courteously  gave  personal 
explanations  to  the  writer  in  Jena;  he  is  also  indebted  to 
the  following  works:  Ernst  Abbe:  Gesammelte  Abliand- 
lungen,  dritter  Band;  Felix  Auerbach:  Das  Zeiss-werk 
und  die  Carl-Zeiss-Stiftung  in  Jena;  Fr.  Schomerus:  Das 
Arbeitsverhaltniss  bei  der  Firma  Carl  Zeiss,  Jena,  3t« 
Auflage,  1909;  Siegfried  Czapski:  Ernst  Abbe  als  Arbeit- 
geber;  A.  Wink<.lmann:  Ernst  Abbe. 

138 


A  SOCIALIZED  BUSINESS  ENTEKPEISE 

pie  microscopes  were  the  chief  output,  and 
some  two  hundred  instruments  of  a  rather 
primitive  type  were  sold.  From  simple 
microscopes  he  proceeded  to  the  manu- 
facture of  compound  instruments,  always 
aiming  at  an  improvement,  but  feeling  the 
difficulty  of  obtaining  better  results  by 
mere  empiricism.  It  was  fortunate  that 
Zeiss  was  able  to  secure  the  services  at  this 
critical  time  of  Ernst  Abbe,  Like  his 
partner,  he  also  was  a  native  of  the  little 
Grand  Duchy  of  Sachsen  Weimar  Eisen- 
ach. He  was  born  in  Eisenach  in  1840.  He 
was  the  son  of  a  spinner,  but  had  the 
advantage  of  a  scientific  education,  studied 
in  Jena  and  Gottingen,  where  he  took  his 
doctor 's  degree,  and  finally  settled  in  Jena 
in  1863  as  Privat  Dozent.  He  entered  into 
partnership  with  Zeiss  in  1866,  w^as  made 
extraordinary  professor  in  1870,  but  de- 
clined a  full  professorship  in  1874  in  order 
to  devote  his  attention  to  the  optical  works. 
Abbe  supplied  the  scientific  mind  which 
was  needed  to  supplement  the  business 
talent  of  Zeiss. 

It  was  found,  however,  that  one  great 
difficulty  in  obtaining  results  lay  in  the 
imperfect  and  uncertain  character  of  the 

139 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

glass.  There  were  practically  at  that  time 
only  two  kinds  of  glass  known,  crown  glass 
and  flint  glass,  and  it  was  difficult  to  get 
the  glassmakers  to  experiment  in  the  for- 
mation of  other  types.  This  important 
element  was  added  by  Dr.  Otto  Schott. 
Stimulated  by  an  essay  of  Abbe,  Schott 
began  in  1881  extended  experiments  in 
new  combinations  and  moved  in  1882  to 
Jena,  in  order  to  prosecute  these  on  a 
larger  scale.  The  glassworks  established 
there  in  1884  were,  and  have  continued  to 
be,  a  distinct  establishment  under  a  sepa- 
rate name,  i.e.,  Schott  und  Genossen,  but 
Zeiss  had  an  interest  in  the  business.  The 
first  catalog  was  issued  in  1886,  and  it 
contained  such  a  large  number  of  novelties 
that  a  new  era  in  instrument  building  dates 
from  that  year. 

From  this  time  on  the  optical  works 
made  rapid  progress.  One  department 
after  another  was  added,  until  the  estab- 
lishment contained  six  different  sections: 
(1)  the  microscopic;  (2)  the  division  for 
projection  and  microphotography ;  (3)  the 
photographic  division;  (4)  the  astronomi- 
cal division;  (5)  the  terrestrial  telescope 
division;  (6)  the  division  for  mensuration. 

140 


A  SOCIALIZED  BUSINESS  ENTEEPKISE 

An  account  of  the  various  improvements 
and  inventions  which  have  originated  in 
these  works  falls  within  the  province  of 
the  physicist  and  need  not  detain  the 
economist.  The  most  popular,  perhaps,  is 
the  trieder  binocular,  the  principle  of 
which  was  applied  as  early  as  the  seven- 
ties by  Abbe.  Others  are  the  relief  binoc- 
ular telescope,  of  which  the  two  arms  are 
hinged,  so  that  according  to  will  one  can 
either  get  an  exaggerated  stereoscopic 
effect,  or,  by  placing  the  two  arms  together, 
look  over  a  wall  or  around  a  corner;  an 
instrument  for  measuring  distances ;  huge 
astronomical  telescopes;  and  an  epidia- 
scope, which  will  project  upon  a  screen 
either  lantern  slides  by  transmitted  light, 
or  opaque  pictures  by  reflected  light.  The 
works  have  steadily  increased  in  size  and 
the  employees  in  numbers.  Beginning  with 
one  assistant,  Zeiss  had  gradually  enlarged 
his  force,  until  he  had  between  three  and 
four  hundred  in  1888.  By  1900  the  num- 
ber was  over  a  thousand,  and  in  the  spring 
of  1908  it  had  touched  two  thousand,  ex- 
clusive of  some  eight  hundred  employed 
in  the  glassworks.  The  simple  buildings 
have  grown  into  a  great  mass,  filling  a 

141 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

large  city  square  and  spreading  out  beyond 
it.  These  few  technical  and  mechanical 
facts  are  given  in  order  that  the  reader 
may  understand  the  kind  of  an  estabhsh- 
ment  that  we  are  dealing  with. 

Carl  Zeiss  died  in  1888,  lea\dng  his  name 
to  the  works,  and  recognized  as  an  impor- 
tant contributor  to  optical  science  by  the 
University  of  Jena,  which  gave  him  an 
honorary  doctor's  degree  in  1881.  He  left 
a  son,  who  was  for  a  short  time  only  con- 
nected with  the  business.  His  withdrawal 
in  1889  left  Abbe  as  the  virtual  head  of  the 
business,  though  supported  ably  by  such 
men  as  Siegfried  CzapsM,  Max  Fischer, 
and  Rudolf  Straubel.  He  retained  this 
position,  however,  for  only  about  three 
years,  for  in  1891  he  founded  the  Zeiss- 
Stiftung.  As  already  mentioned.  Abbe  was 
the  son  of  a  spinner.  He  had,  therefore, 
experienced  the  hardships  of  long  hours 
and  small  pay.  He  had  now  become  the 
proprietor  and  manager  of  a  large  indus- 
trial establislunent,  but  had  not  forgotten 
the  surroundings  of  his  youth  and  was  able 
to  realize  the  human  side,  as  well  as  the 
financial  and  scientific  sides,  of  great  enter- 
prises.    Though  absorbed  in  his  work,  he 

142 


A  SOCIALIZED  BUSINESS  ENTEKPKISE 

had  found  time  to  give  a  good  deal  of 
thought  to  public  and  social  matters.  His 
essays,  which  were  published  after  his 
death,  fill  five  good-sized  volumes.  Among 
these  are  observations  on  various  subjects, 
political  and  social,  and  from  these  writ- 
ings we  are  able  to  learn  something  of  the 
motives  and  reasons  that  guided  him 
in  creating  the  Zeiss-Stiftung.  To  ade- 
quately describe  this  foundation  is,  how- 
ever, not  easy.  Its  statutes  alone  fill  sixty- 
eight  pages  of  the  works  of  Abbe,  and  his 
commentary  upon  them  fifty-eight  more. 
It  will,  therefore,  be  seen  that  it  is  decid- 
edly complicated,  much  more  so  than  the 
constitution  of  the  United  States.  All  of 
the  details  cannot  be  given,  and  only  the 
leading  features  will  be  set  forth.  The 
provisions  fall  into  two  general  groups, 
regulating  (1)  the  ownership;  (2)  the 
relations  with  the  employees. 

The  conditions  of  ownership  are  so 
peculiar  as  to  be  almost  unique.  The 
foundation  is  neither  a  partnership  nor  a 
joint  stock  company,  nor  is  it  a  charitable 
institution.  It  is  a  business  corporation, 
owning  and  controlling  the  optical  works, 
but  it  operates  under  the  final  control  of 

143 


THE  ECONOMIC  UTILIZATION  OF  HISTORY 

the  state.  This  follows  to  a  certain  extent 
from  the  statement  of  the  purposes,  wliich 
are  enumerated  as  follows : 

A.  Appertaining  to  the  works. 

1.  The  cultivation  of  the  branches  of  instru- 
ment making  which  are  established  in  Jena. 

2.  The  permanent  provision  for  the  economic 
security  of  these  enterprises  and  for  the  mainte- 
nance of  the  labor  organization  which  is  con- 
nected with  them. 

3.  The  accomplishment  of  greater  social  duties 
than  a  personal  o^-ner  could  permanently  guar- 
antee for  the  purpose  of  bettering  the  personal 
and  economic  position  of  all  of  those  who  co-oper- 
ate in  the  works. 

B.  Outside  of  the  works. 

1.  The  promotion  of  the  general  interests  of 
the  mechanical  arts  involved. 

2.  Participation  in  institutions  and  measures 
which  are  in  the  general  interest  of  the  laboring 
population  of  Jena  and  the  neighborhood. 

3.  The  promotion  of  scientific  and  mechanical 
studies. 

It  is  clear  that  these  purposes  might  be 
carried  out  by  an  individual  or  a  joint 
stock  company,  but  it  would  be  difficult  to 
insure  their  observation  under  the  con- 
ditions involved  in  the  unrestricted  con- 
trol of  private  owners.     The  foundation 

144 


A  SOCIALIZED  BUSINESS  ENTEEPRISE 

as  a  legal  personality  is  represented  by 
what  is  called  the  Stiftimgs-Verwaltung, 
or  governing  board.  For  the  management 
of  the  business  there  are  in  addition  the 
Vorstdnde,  or  managing  boards,  one  for 
each  of  the  works  that  may  exist  at  any 
time,  and  a  commissioner,  who  represents 
the  governing  board  in  the  meetings  of  the 
managing  boards.  The  rights  and  duties 
of  the  government  of  the  foundation  are 
entrusted  to  that  department  of  the  grand 
ducal  government  which  has  charge  of  the 
University  of  Jena,  and  the  permanent 
commissioner  must  be  a  high  officer  as- 
signed by  the  minister  to  this  duty.  The 
enterprise  is  thus  under  the  ultimate  con- 
trol of  the  government,  subject  always  to 
the  terms  of  the  trust.  Each  managing 
board  of  a  business  enterprise  must  con- 
sist of  a  group,  which,  however,  cannot 
contain  more  than  four  members.  In  the 
case  of  the  optical  works,  at  least  one  mem- 
ber of  this  board  must  be  connected  with 
the  management  of  the  glassworks.  The 
members  are  appointed  by  the  government, 
after  due  consideration  of  the  report  of  the 
commissioner  and  of  the  other  members  of 
the  board,  and  no  one  can  be  appointed 

145 


THE  ECONOMIC  UTILIZATION  OP  HISTOKY 

against  the  unanimous  vote  of  these  mem- 
bers. Only  those  persons  can  be  appointed 
who  are  experts,  either  in  science  or  in 
business,  and  at  least  one  member  must  be 
an  expert  scientist  in  the  subjects  con- 
cerned in  the  business.  This  board  prac- 
tically manages  the  business  interests,  and 
when  the  Zeiss-Stiftung  was  fully  devel- 
oped and  its  statutes  adopted,  which  was 
not  until  1896,  Abbe  simply  became  one  of 
the  three  members  of  the  board  of  the 
Zeiss-Werh.  The  statutes  provided  that 
they  should  not  be  re\ased  for  ten  years. 
At  the  end  of  that  time,  in  1906,  some  minor 
changes  were  made,  and  the  description 
given  here  will  apply  to  the  statutes  in 
their  present  form.  Elaborate  provisions 
are  made,  under  which  further  amend- 
ments may  be  introduced,  but  they  are  not 
encouraged. 

In  describing  the  relations  of  the 
employees  to  the  establishment,  it  is  impor- 
tant to  emphasize  at  the  outset  that  Abbe 
intended  to  maintain  in  the  fullest  sense 
of  the  word  the  freedom  of  the  employees 
and,  therefore,  to  avoid  anything  savoring 
of  paternalism,  either  in  the  good  or  bad 
sense  of  the  term.    That  is  to  say,  he  did 

146 


A  SOCIALIZED  BUSINESS  ENTERPEISE 

not  wish  to  have  the  business  treat  its 
employees  like  a  fairy  godmother,  nor,  on 
the  other  hand,  to  take  advantage  of  their 
dependence  upon  it  in  order  to  influence 
either  their  political  or  their  social  ideas. 
His  aim  was  to  make  their  relations  busi- 
ness  relations,  nothing  more.     Business, 
however,   does  not  necessarily  mean  the 
crudest  form  of  business.    Labor  contracts 
may,  as  already  stated,  take  any  form  from 
the  simplest  to  the  most  complex,  without 
departing  from  the  business  basis.    It  goes 
without  saying,  therefore,  that  all  of  the 
insurance  features  required  by  the  German 
insurance  law  are  included  in  the  labor  con- 
tract, and  it  is  not  surprising  to  find  that 
some  of  these  features  were  voluntarily 
anticipated  in  the  works  before  the  Zeiss- 
Stifhmg  was  created,  and  before  the  insur- 
ance laws  were  passed,  while  others  have 
been  elaborated  beyond  the  requirements 
of  the  law.    Thus  compulsory  sick  insur- 
ance was  introduced  as  early  as  1875,  and 
after  the  passing  of  the  imperial  law,  the 
fund  was  converted  to  conform  to  that  law. 
In  1888,  on  the  day  of  the  death  of  Zeiss,  a 
system  of  old  age  pensions  was  introduced. 
In  1892,  a  further  step  was  taken  in  guar- 

147 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

anteeing  a  minimum  weekly  compensation, 
provision  for  overtime,  etc.,  and  in  the 
same  year  the  semi-annual  medical  exami- 
nation of  juvenile  workers  and  apprentices 
was  introduced  as  a  prophylactic  measure 
against  sickness.  In  1893  a  special  savings 
bank  for  the  establishment  was  introduced. 
Since  the  full  establishment  of  the  statutes 
of  the  Stiftung,  the  labor  contract  includes, 
besides  the  ordinary  insurance  features 
already  noted,  many  other  provisions. 
The  very  first  article  of  the  statutes  relat- 
ing to  employees  says  that  they  must  be 
appointed  without  reference  to  race,  con- 
fession, or  political  party.  They  must  also 
be  permitted  to  exercise  their  general  per- 
sonal and  political  rights.  To  take  up  some 
more  of  the  details,  the  regular  working- 
day  is  limited  to  nine  hours;  no  one  is 
obliged  to  work  overtime  or  on  holidays, 
excepting  in  the  case  of  interruptions  of 
the  works,  and  contracts  for  overtime  can- 
not be  made  for  more  than  four  weeks.  All 
workers  over  eighteen  years  of  age  are 
entitled  to  a  holiday  of  twelve  working- 
days,  and  if  any  are  appointed  to  honorary 
offices  in  the  service  of  the  empire,  the 
state,  or  th3  town,  the  necessary  leave  of 

148 


A  SOCIALIZED  BUSINESS  ENTERPEISE 

absence  must  be  given  for  this  purpose. 
Provision  is  also  made  for  committees  to 
represent  the  workers. 

All  must  be  appointed  for  a  time  wage, 
which  is  fixed  in  advance,  per  week  or  per 
month,  and  is  to  be  paid  for  the  holidays 
which  fall  on  week  days,  but  other^\ase  they 
are  to  be  paid  only  according  to  the  time 
which  is  spent.  This  pay  cannot  be  low- 
ered in  the  case  of  a  temporary  or  perma- 
nent shortening  of  the  working-day,  unless 
the  man  in  question  is  unable  to  continue 
his  former  activity,  or,  for  reasons  which 
lie  in  himself,  passes  over  to  another  posi- 
tion. In  the  case  of  piece  work,  the  fixed 
time  wage  counts  as  a  minimum  income, 
and  pay  is  continued  during  the  regular 
yearly  vacation. 

Important  incidents  of  the  labor  contract 
are,  of  course,  the  insurance  features.  The 
sick  fund  cannot  give  the  members  less 
than  full  allowance  for  a  half  year  (since 
extended  to  a  year),  three-fourths  of  the 
average  wages  as  a  sick  allowance,  insur- 
ance of  the  nearest  family  members,  free 
choice  of  the  physicians  among  the  certi- 
fied physicians  of  the  dwelling  place,  and 
obligatory  contribution  on  the  part  of  the 

149 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

management  equal  to  the  contributions  of 
the  insured.  Employees  who  have  entered 
the  service  before  their  fortieth  year  and 
have  worked  for  five  years  have  a  legal 
claim  for  a  pension,  if  they  become  unable 
to  work  or  otherwise  to  continue  their 
activity,  except  for  gross  faults  on  their 
part,  while  those  dependent  upon  them  also 
receive  an  allowance.  In  general,  the  pen- 
sion amounts  to  50  per  cent  of  the  nominal 
wage  for  those  who  have  worked  between 
five  and  fifteen  years,  and  it  increases  by 
1  per  cent  up  to  the  fortieth  year.  The 
total  may  thus  become  75  per  cent  of  the 
wage.  Nothing  is  said  about  insurance 
against  accidents,  as  this  is  regulated 
under  the  general  laws  and  is  a  charge 
upon  the  business.  One  of  the  most  pecu- 
liar and  significant  features  of  the  labor 
contract  is  the  provision  for  an  indemnifi- 
cation upon  dissolution  of  the  relation. 
Two  weeks'  notice  must  be  given  on  either 
side,  for  ordinary  workers,  and  six  weeks' 
for  those  in  the  business  ofiSce.  In  addi- 
tion to  this,  those  who  have  been  in  the 
service  for  three  years,  after  the  comple- 
tion of  their  eighteenth  year,  have  a  claim 
for  indemnity,  if  they  are  dismissed  with- 

150 


A  SOCIALIZED  BUSINESS  ENTERPRISE 

out  being  incompetent  to  continue  their 
work  or  are  guilty  of  some  fault  which  has 
led  to  their  dismissal.  This  indemnity 
takes  the  form  of  the  continuation  of  their 
previous  wages  for  the  six  months  follow- 
ing their  dismissal,  and  for  those  who  have 
a  claim  to  a  pension,  the  indemnity  cannot 
be  less  than  the  amount  of  their  invalidity 
pension  for  a  period  equal  to  a  quarter  of 
the  time  of  service  on  which  it  would  be 
reckoned.  Thus  the  longer  a  person  has 
been  in  the  service,  the  larger  his  indem- 
nity. His  dismissal  for  some  serious 
fault,  such  as  drunkenness,  dishonesty, 
etc.,  causes  the  forfeiture  of  this  right. 
The  reason  for  this  peculiar  provision  is 
not  so  much  to  give  the  men  a  present  as 
to  bring  a  pressure  to  bear  upon  the  man- 
ager not  to  cut  down  the  number  of  hands 
unnecessarily  in  a  period  of  business  de- 
pression, which  in  turn,  of  course,  implies 
not  increasing  them  unduly  in  case  the 
business  becomes  suddenly  active.  The 
aim  is  to  maintain  a  certain  steadiness  in 
the  number  of  employees  and  thus  avoid 
violent  fluctuations. 

Not  less  important  than  the  pro^asions 
regarding  the  employees  are  those  which 

151 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

relate  to  the  profits.  Special  clauses  define 
the  statistical  methods  which  are  to  be 
applied.  These  may  be  roughly  condensed 
as  follows.  The  yearly  expenditure  is  the 
sum  of  all  expenses  and  obligations  which 
are  due  within  the  fiscal  year,  including  the 
payments  for  pensions,  etc.,  which  are  to 
be  treated  as  part  of  the  cost  of  produc- 
tion. The  business  gain  or  deficit  is  the 
difference  between  the  expenditure  as  just 
defined  and  the  total  income ;  the  net  profit 
of  each  establishment  is  obtained  by  taking 
into  account  a  proper  amount  for  deprecia- 
tion and  interest  on  the  capital,  which  shall 
include,  besides  the  regular  rate  of  interest 
on  mortgages,  a  premium  for  risk,  corre- 
sponding to  the  average  loss  of  capital  in 
similar  industries.  This,  however,  is  not 
the  amount  available  for  dividends.  In 
order  to  secure  the  permanency  of  the 
works,  a  certain  sum  is  set  aside  for  a 
reserve  fund,  which  includes  among  other 
things  a  sum  necessary  to  secure  the  vari- 
ous demands  for  pensions,  indemnities, 
etc.,  a  sum  for  extending  the  business,  and 
a  sum  to  make  good  a  possible  loss.  When 
it  has  reached  an  amount  sufficient  to 
meet    these    requirements,    a    constantly 

152 


A  SOCIALIZED  BUSINESS  ENTERPRISE 

diminishing  sum  is  to  be  added  to  it. 
After  all  of  these  demands  are  met,  the 
Stiftung  is,  according  to  circumstances,  to 
set  aside  one-half  or  three-quarters  of 
what  remains  for  the  purposes  expressed 
in  section  B,  namely,  the  general  interests 
of  the  industry  or  of  science.  The  final 
disposition  of  the  reserve  fund  rests  mth 
the  Stif tun gs-V er wait ung ,  or  administra- 
tion. Special  provision  is,  however,  made 
for  sharing  the  profits  with  the  employees. 
The  percentage  which  is  thus  to  be  added 
to  wages  and  salaries  from  the  profits  is 
to  be  determined  from  year  to  year  in  such 
a  way  that,  taking  account  of  the  fluctua- 
tions in  the  activity  of  business,  a  proper 
relation  shall  exist  between  the  share  of 
the  employees  and  the  share  of  the  founda- 
tion, according  to  the  specified  provision 
made  for  this  purpose.  These  are  defined 
in  a  general  way  by  the  statement,  that  the 
aim  is  not  so  much  to  increase  the  net 
profits  as  the  total  output,  and  that  the 
Stiftung  shall  retain  that  part  of  the 
profits  which  has  been  earned,  not  by  the 
laborers  as  individuals,  but  rather  by  the 
organization  as  a  whole  and  as  a  going 
concern. 

153 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

A  word  should  be  said  regarding  this  so- 
called  profit  sharing.  Abbe  himself  once 
delivered  an  address  on  the  subject,  in 
which  he  took  up  the  various  arguments 
commonly  urged  in  favor  of  profit  sharing 
and  rejected  them  all.  One  point  that  he 
especially  emphasized  was  that  the  system 
was  liable  to  be  illusory,  because  there  was 
always  great  danger  that  the  nominal 
wages  paid  would  be  reduced  by  the 
amount  paid  as  a  share  in  the  profits,  so 
that  the  total  wages  would  be  no  more  than 
before.  He  put  no  faith  in  the  power  of 
profit-sharing  devices  to  conciliate  the  dif- 
ferences between  the  employer  and  em- 
ployed.- Nevertheless,  he  introduced  a 
system  of  profit  sharing  in  his  foundation 
on  other  grounds.  The  share  in  the  profits 
was  not  intended  to  give  the  worker  in 
good  years  more  than  he  would  ordinarily 
receive.  Nevertheless,  it  was  important, 
because  it  made  it  possible  to  establish 
nominal  wages  which  in  bad  years  would 
secure  the  laborer  against  having  his  earn- 
ings pushed  below  a  certain  level.  He 
illustrates  his  point  by  a  simile.  In  the 
industrial    organization    of    the    optical 

2  Abhandlungen,  Vol.  Ill,  p.  109. 
154 


A  SOCIALIZED  BUSINESS  ENTEEPRISE 

works,  he  states,  there  are  two  beams  upon 
which  the  important  interests  of  the  work- 
ing forces  are  supported.  One  is  a  strict 
wage  system,  by  which  the  manager  is 
pledged  to  certain  minimum  rates  even  in 
bad  years.  The  other  is  the  financial 
strength  of  the  enterprise,  on  which  the 
execution  of  this  wage  system  depends.  In 
order  that  these  two  beams  may  be  held 
together  they  are  supported  by  a  special 
bolt,  that  is,  the  profit  which  in  good  years 
makes  the  income  of  the  workers  depend 
upon  the  fluctuations  of  business.  On  this 
bolt  there  is  a  pretty  rosette ;  namely,  the 
pleasure  which  the  individual  gets  from 
sharing  in  the  profits.  The  significant 
thing,  however,  is  not  the  rosette  but  the 
bolt.  In  point  of  fact,  the  enterprise  has 
yielded  profits  enough  to  be  divided  every 
year  but  one,  but  the  amount  has  varied 
considerably,  ranging,  except  in  the  year 
1902-03  when  nothing  was  divided,  from  5 
per  cent  to  10  per  cent.^ 

The  nominal  working-day,  as  already 
stated,  was  limited  by  the  statutes  to  nine 
hours.    In  point  of  fact,  they  have  had  an 

sSchomenis:  Arbeitsverhaltniss,  p.  10. 
155 


THE  ECONOMIC  UTILIZATION  OF  HISTOET 

eight-hour  working-day  since  1900,  and  the 
manner  in  which  this  change  was  brought 
about  is  so  characteristic  that  a  word  or 
two  should  be  said  about  it.  At  the  begin- 
ning of  1900  the  question  was  put  to  the 
employees :  ' '  Who  is  willing  to  try  to  pro- 
duce as  much  in  eight  hours  as  hitherto  in 
nine  hours?"  About  six-sevenths  of  the 
employees  voted  for  the  experiment,  and 
the  eight-hour  day  was  introduced  provi- 
sionally for  a  year.  The  result  was  very 
satisfactory.  It  could  not  be  measured 
exactly,  excepting  in  the  case  of  the  piece 
workers,  but  it  turned  out  that  here  the 
output  was  not  only  not  less,  but  that  it  had 
increased  about  4  per  cent.  When  the 
matter  was  looked  into  more  carefully,  and 
the  workmen  questioned,  they  said  that  in 
the  beginning  they  worked  verj'  hard  in 
order  to  keep  up  their  production  and  their 
pay,  but  that  they  found  this  too  exacting ; 
then  they  dropped  into  the  old  pace  and 
wanted  a  return  to  the  nine-hour  day.  The 
figures  showed,  however,  that  they  had  not 
gone  back  to  the  old  pace.  They  had  given 
up  the  killing  pace,  but  had  returned  to 
one  which  was  still  higher  than  the  old 
one  and  jdelded  a  slightly  larger  output. 

166 


A  SOCIALIZED  BUSINESS  ENTEEPRISE 

Abbe  explained  the  matter  in  a  very  simple 
way.  He  established  an  equation  of  human 
exertion,  according  to  which  the  daily 
expenditure  of  energy  must  be  equal  to  the 
daily  replacement;  this  expenditure  de- 
pends upon  three  elements :  (1)  the  produc- 
tion; (2)  the  speed;  (3)  the  fatigue  during 
the  intervals  of  labor,  the  seconds  or  min- 
utes lost  in  driblets,  while  standing  or 
waiting  in  the  noise  and  the  bad  air  of  the 
factory.  These  driblets  are  worth  noth- 
ing for  relaxation,  but  if  they  can  be  cut 
short  and  the  time  lumped,  they  are  valu- 
able. The  point  is  to  gradually  shorten  the 
time  of  labor,  until  the  gains  coming  from 
a  longer  period  of  relaxation  and  a  smaller 
waste  of  time  are  still  greater  than  the 
loss  due  to  increased  speed.  The  limit 
represents  the  optimum.  This  ^\\\\,  of 
course,  differ  according  to  the  occupations 
and  the  intelligence  of  the  people.  The 
case  could  not  be  proved  so  exactly  for  the 
time  workers,  but  it  was  thought  that  here, 
too,  there  was  no  loss  of  output.  The  con- 
sequence is  that  since  April,  1901,  the 
eight-hour  day  has  been  the  rule.  The 
hours  vary  according  to  the  season.  In 
summer  they  are  from  7  to  11.30  and  1.30 

157 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

to  5;  in  winter,  from  7.30  to  12  and  2  to 
5.30.  Pauses  for  luncheon,  morning  and 
afternoon,  are,  however,  now  abolished 
and  the  prohibition  of  drinking  during  the 
working  hours  has,  doubtless,  something 
to  do  with  the  favorable  results  of  the 
shorter  day. 

Some  incidental  features  should  still  be 
mentioned.  A  good  deal  has  been  done  for 
the  general  education  and  benefit  of  the 
people,  especially  in  the  maintenance  of 
the  Volhsliaus,  with  a  fine  library,  reading- 
room,  etc.  Baths,  too,  have  been  intro- 
duced. The  factory  has  even  gone  into  the 
business  of  manufacturing  temperance 
drinks  to  sell  to  the  employees,  and  of  sell- 
ing milk  to  them  on  a  large  scale.  Money 
is  loaned,  to  help  people  build  houses,  at  a 
moderate  rate  of  interest.  But  there  are 
no  company  houses.  There  are  schools  for 
instruction  in  trades,  etc.  The  question  of 
patents  is  distinctly  dealt  with  in  the 
statutes,  and  it  is  provided  that  such  inven- 
tions, improvements,  etc.,  as  are  useful  for 
the  promotion  of  science,  shall  not  be  pro- 
tected by  patents  or  similar  measures.  In 
point  of  fact,  however,  the  concern  has 
been  obliged  to  take  out  patents  in  self- 

158 


A  SOCIALIZED  BUSINESS  ENTERPRISE 

protection,   and  they  are  regarded   as   a 
necessary  evil/ 

Not  only  the  workmen  in  the  ordinary 
sense  of  the  word,  but  also  the  officials  of 
the  company  have  to  be  provided  for.  It 
goes  without  saying  that  the  higher  offi- 
cials receive  higher  compensation,  on  ac- 
count of  the  greater  responsibility  put 
upon  them,  but,  in  order  that  they  may  not 
be  tempted  to  unduly  raise  their  own 
salaries,  it  is  provided  that  the  highest 
compensation  shall  not  be  greater  than  ten 
times  the  average  yearly  income  of  all 
persons  over  twenty-four  years  of  age  who 
have  been  in  the  works  at  least  three  years, 
according  to  the  average  of  the  last  three 
business  years.  Moreover,  the  members  of 
the  boards  of  managers  do  not  share  in  the 
profits. 

In  the  beginning  mention  was  made  of 
the  inclusion  of  certain  public  purposes  in 
the  Zeiss  Foundation.  These  have  been 
realized  mainly  by  gifts  to  the  university. 
Indeed,  the  effect  of  the  works  has  been, 
not  only  to  add  very  considerably  to  the 
population  and  prosperity  of  the  town,  but 
also   to   rejuvenate   the  university  to   an 

*  Auerbach,  1.  c,  p.  146. 

159 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

amazing  degree.  Thirty  years  ago  the 
University  of  Jena,  although  old,  was  small 
and  badly  equipped.  The  profits  of  the 
Zeiss  works  have  not  only  been  used  to 
add  certain  regular  funds,  but  also  to  make 
extraordinary  improvements.  Among  these 
are  new  buildings  for  the  physical,  hy- 
gienic, and  mineralogical  institutions,  the 
creation  of  an  institute  for  scientific  micro- 
scopy, an  extension  of  the  chemical  insti- 
tute, and  the  addition  of  a  seismographic 
institute  to  the  astronomical  observatory. 
Otto  Schott  has  also  given  large  sums, 
especially  for  technical  physics  and  techni- 
cal chemistry,  out  of  his  private  means. 
Finally,  the  entire  scale  of  professorial 
salaries  has  been  reformed  and  raised.^ 

One  naturally  asks.  What  are  the  results 
of  this  elaborate  arrangement!  It  is  clear 
that  the  time  is  not  ripe  for  any  final 
judgment.  Only  about  fifteen  years  have 
elapsed  since  the  foundation  came  into 
complete  working  order.  It  has  not  been 
subject  to  the  test  of  hard  times,  or  of  a 
change  in  the  spirit  of  its  management. 
The  personal  respect  for  the  founders 
doubtless  still  counts  as  a  factor  in  pre- 

5  Auerbach,  1.  c,  pp.  148,  155. 
160 


A  SOCIALIZED  BUSINESS  ENTEEPRISE 

venting  friction.  Moreover,  it  must  be 
remembered  that  this  particular  form  of 
manufacturing  is  exceptional.  It  deals 
with  mechanics  of  a  high  grade,  intelligent 
and  highly  paid,  therefore  relatively  stable. 
It  turns  out  a  product  which  contains  high 
value  in  small  bulk  and  is,  therefore,  rela- 
tively independent  of  questions  of  trans- 
portation and  local  conditions.  It  would 
be  altogether  rash  to  assume  that  its  suc- 
cess in  Jena  would  necessarily  make  it  a 
model  for  manufacturing  establishments 
in  general.  The  enterprise  as  a  whole  is, 
of  course,  eminently  successful.  Its  pro- 
duct is  of  the  highest  grade,  the  men  are 
well  paid,  the  average  wage  being  about 
1,900  marks  a  year,^  and  the  relations  are 
on  the  whole  peaceful.  They  have  never 
had  a  strike,  though  such  a  disturbance  was 
once  threatened.  Dr.  Schomerus  is  espe- 
cially appointed  to  look  after  the  relations 
with  the  men,  and  his  tact  and  skill  are 
doubtless  of  great  importance.  He  stated 
that  the  fact  that  the  management  were  so 
easily  approachable  led  to  a  considerable 
number  of  small  explosions  which  pre- 
vented discontent  from  gathering  to  create 

6  Auerbach,  1.  c,  p.  123. 

161 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

a  large  one.  Many  details  in  the  scheme 
are  even  now  criticised.  Some  authorities 
think  that  the  limitation  of  the  salaries 
of  the  head  men  keeps  them  altogether  too 
low.  It  is  clear  that  if  the  average  wages 
are  1,900  marks,  the  maximum  for  the 
managers  must  be  about  19,000  marks,  or 
less  than  $5,000.  If  one  may  judge  from 
the  results,  the  system  is  hard  on  the  brain 
workers.  Both  Abbe  and  his  successor, 
Czapski,  died  comparatively  young,  the 
former  at  sixty-five,  the  latter  at  forty-six, 
and  apparently  overwork  was  not  without 
its  influence  in  shortening  their  lives. 
Though  the  conditions  of  employment 
would  seem  to  be  ideal,  the  hours  being 
short,  the  w^ages  high,  the  buildings  clean 
and  well  equipped,  the  insurance  features 
liberal,  there  are  yet  a  good  many  socialists 
among  the  workers.  We  are  told  that  out 
of  about  two  thousand  employees,  some 
two  hundred  would  be  classed  as  office  men 
and  of  the  remaining  eighteen  hundred 
about  eight  hundred  belong  to  the  socialist 
unions,  or  Gewerkschaften,  about  one  hun- 
dred and  fifty  to  the  liberal  Gewerkvereine. 
This  is,  of  course,  not  necessarily  a  sign 
of  discontent  with  the  conditions  of  em- 

162 


A  SOCIALIZED  BUSINESS  ENTEKPRISE 

ployment.  When  a  business  is  increasing 
so  rapidly,  it  must  draw  a  considerable 
part  of  its  workers  from  other  places,  and 
they  naturally  do  not  give  up  the  political 
affiliations  which  they  have  perhaps  cher- 
ished for  years.  On  the  other  hand,  the 
fact  that  they  belong  to  a  party  which  is  in 
its  faith,  if  not  in  its  works,  revolutionary, 
also  indicates  that  they  do  not  believe  that 
they  have  found  an  economic  paradise, 
even  in  Jena.  It  would  not  be  strange, 
perhaps,  if  all  of  the  two  thousand  employ- 
ees did  not  fully  share  the  ideal  aims  of  the 
founder,  even  though  they  are  perfectly 
willing  to  share  in  the  profits  which  his 
genius  has  made  possible,  and  it  is  said 
that  they  sometimes  begrudge  the  large 
sums  given  to  the  university. 

The  interest  and  significance  of  the 
Zeiss-Stiftung  to  the  writer  lie  more  in  the 
motives  and  ideas  which  it  embodies  than 
in  its  details.  Many  of  the  results  accom- 
plished by  the  Zeiss-Stiftung  are  accom- 
plished by  great  enterprises  in  other  parts 
of  the  world  under  a  different  form.  When, 
e.g.,  Mr.  Carnegie  gives  ten  millions  of 
steel  bonds  to  found  an  institution  for 
scientific  research,  he  is  putting  the  United 

163 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

States  Steel  Corporation  under  the  obliga- 
tion of  contributing  a  certain  part  of  its 
earnings  toward  this  purpose,  very  much 
as  the  managers  of  the  Zeiss-Stiftung  set 
apart  some  of  the  earnings  of  the  works  in 
order  to  promote  scientific  study  in  the 
University  of  Jena.  Likemse  when  the 
steel  corporation  and  other  companies  set 
aside  some  of  their  stock  to  be  acquired  by 
employees,  they  give  these  holders,  not 
only  a  share  in  the  profits  of  the  business, 
but  also  an  interest  in  preserving  the  per- 
manent strength  of  the  whole  enterprise, 
as  distinguished  from  the  temporary  ad- 
vantage of  one  class  of  workers.  The  steel 
corporation,  however,  was  founded  to  make 
money  for  its  stockholders  and  bondhold- 
ers. It  is  merely  through  an  act  of  gener- 
osity on  the  part  of  individual  owners  of 
securities  that  it  may  be  made  to  contrib- 
ute toward  scientific  research  or  other  pub- 
lic objects,  whereas  the  social  relations  of 
capital  are  recognized  in  the  very  business 
constitution  of  the  Zeiss-Stiftung. 


164 


CHAPTER  XI 

Social.  Myopia 

In  the  parable  of  the  Good  Samaritan 
we  are  told  of  a  man  traveling  from  Jeru- 
salem to  Jericho,  who  "fell  among  thieves, 
which  stripped  him  of  his  raiment,  and 
wounded  him,  and  departed,  leaving  him 
half  dead.  "^  The  Samaritan  saw  his 
plight ;  took  him  to  an  inn ;  spent  the  night 
with  him;  and  as  he  paid  his  bill  on  the 
morrow  said  to  the  innkeeper,  "whatso- 
ever thou  spendest  more,  when  I  come 
again,  I  will  repay  thee."  The  Good 
Samaritan  showed  all  of  the  traits  which 
we  still  consider  most  valuable  in  the  char- 
itable at  the  present  day.  He  had  a  lively 
sympathy,  which  caused  him  to  stop  and 
inquire  into  the  condition  of  the  wounded 
man;  he  had  the  spirit  of  altruism,  which 
impelled  him  to  give  aid ;  he  had  practical 
sense,  which  enabled  him  to  do  it  in  the 
most  effective  manner;  and  he  had  the 
imagination   to   think   of  the   future   and 

iLuke  X.   30. 

165 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

provide  for  its  needs.  All  of  these  quaK- 
ties  we  recognize  as  good,  but  do  we  always 
apply  them?  Above  all,  do  we  sufficiently 
cultivate  the  social  imagination? 

In  reading  the  parable,  one  is  almost 
tempted  to  imagine  a  sequel  to  the  story, 
in  order  to  more  thoroughly  adapt  it  to 
modern  conditions.  Let  us  suppose,  for 
example,  that,  when  the  kind  deed  of  the 
Samaritan  became  known  in  Jerusalem,  it 
stimulated  others  to  follow  his  example. 
A  number  of  well-meaning  people  united 
themselves  into  a  society  to  establish  a 
hospital  on  the  way  from  Jerusalem  to 
Jericho,  and  equip  it  with  doctors  and 
nurses,  in  order  to  give  treatment  to  all 
who  might  fall  into  the  hands  of  thieves  by 
the  way.  The  hospital  did  a  large  busi- 
ness, and  the  demands  upon  it  increased  so 
rapidly  that  one  generous  individual  de- 
cided to  endow  it  with  a  fund,  out  of  the 
income  of  which  those  who  lost  their  money 
by  robbery  might  be  reimbursed.  After 
many  years  of  operation,  during  which 
the  demands  made  upon  it  fully  justified 
its  existence  in  the  minds  of  the  founders, 
the  Samaritan  happened  to  come  back  to 
Jerusalem  and  attended  the  annual  meet- 

166 


SOCIAL  MYOPIA 

ing  of  the  society.  Whereupon  he  arose 
and  addressed  the  members  somewhat  as 
follows : 

''I  have  studied  the  work  of  this  society 
for  many  years,  and  it  seems  to  me  that 
a  large  part  of  the  money  which  we  are 
spending  goes  into  the  pockets  of  the 
thieves.  If  they  see  a  defenseless  traveler 
going  to  Jericho,  they  rob  him  before  he 
reaches  the  halfway  hospital;  they  then 
lie  in  wait  for  him  further  down  the  road 
to  relieve  him  of  the  money  which  he  has 
just  been  receiving.  Thus,  what  we  spend 
is  really  encouraging  the  outlaw,  and  we 
are  maintaining  an  endless  chain  of  char- 
ity. I  propose  that,  before  spending  any 
more  money  on  the  hospital,  we  endeavor 
to  interest  the  authorities,  and  see  if  it 
is  not  possible  to  so  police  the  road  that  no 
robbery  will  be  possible  upon  it. ' ' 

But  when  the  Samaritan  had  made  this 
speech,  he  was  charged  with  being  no  bet- 
ter than  a  cold-blooded  economist,  and 
requested  to  leave  the  meeting. 

This  modernized  parable  may  seem  like 
a  grotesque  caricature  of  the  facts.  But 
let  us  examine,  without  prejudice  and 
without  fear,  some  of  the  conditions  under 

167 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

which  charity  work  is  carried  on  in  our 
country,  before  we  say  confidently  that  we 
do  not  maintain  an  endless  chain  of  our 
o^vn. 

I  shall  not  speak  here  of  those  elements 
in  society  which  prey  upon  the  community 
openly  and  avowedly,  nor  of  the  familiar 
vices  and  failings  of  human  nature  which 
are  the  cause  of  so  much  evil.  I  shall 
refer  rather  to  those  more  subtle  forces, 
which  are  often  so  fixed  in  our  customs 
and  our  institutions  that  we  hardly  recog- 
nize them  as  thieves,  and  indeed  should 
consider  it  uncivil  to  refer  to  them  as  such. 
As  it  is  easy  to  pillory  those  beings  which, 
having  no  ears  cannot  hear,  and  having  no 
voices  cannot  talk  back,  I  will  mention  first 
those  bandits  of  the  body  which  are  respon- 
sible for  most  of  our  modern  ailments  and 
which,  though  they  do  not  strip  us  of  our 
raiment,  often  leave  us  half  dead  or  en- 
tirely dead  by  the  wayside  of  life.  These 
bacilli,  as  they  are  commonly  called,  are 
of  many  kinds,  and  I  need  not  distinguish 
among  them.  The  bacillus  of  tuberculosis 
enjoys  perhaps  the  greatest  reputation  on 
account  of  the  extent  of  his  depredations ; 
but  the  bacilli  of  anthrax,  of  typhoid,  of 

168 


SOCIAL  MYOPIA 

scarlet  fever,  are  active  according  to  their 
lights  and  their  opportunities. 

It  is  well  known  that  most,  if  not  all, 
of  these  robbers  of  health  and  efficiency 
thrive  in  crowded  cities  and  houbes.  It 
is  also  known  that  they  are  especially 
favored  by  filth.  Nevertheless,  our  coun- 
try, as  a  whole,  and  our  cities,  in  particu- 
lar, are  striving  with  might  and  main  to 
increase,  not  the  population  bred  from  the 
old  stock,  but  the  immigrant  population, 
and  though  we  are  well  aware  that  this 
congestion  brings  new  dangers  to  health, 
we  make  no  adequate  provision  against 
the  spread  of  disease.  Let  us  take  a  con- 
crete example. 

In  a  city,  not  a  thousand  miles  removed 
from  the  State  of  Connecticut,  the  robber 
bacilli  have  been  found  to  be  so  active  that 
a  movement  was  inaugurated  some  years 
ago  to  put  them  in  jail  and  try  at  least 
to  diminish  their  depredations  upon  way- 
faring men.  In  other  words,  it  was  pro- 
posed to  establish  an  isolation  hospital. 
The  citizens  were  unanimously  in  favor  of 
the  project,  in  the  abstract,  but  whenever 
it  was  proposed  to  give  a  local  habitation 
as  well  as  a  name  to  this  excellent  idea, 

169 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

the  people  in  the  neighborhood  of  the  pro- 
posed site  regularly  rose  up  as  one  man, 
and  protested  against  its  establishment  on 
the  ground  that  it  would  lower  the  price 
of  real  estate.  The  wise  men  of  the  city, 
after  having  vainly  tried  a  number  of  sites, 
at  last  thought  that  they  had  found  a  solu- 
tion of  the  difficulty,  and  decided  to  build 
a  modern  well-equipped  establishment  on 
the  site  of  some  hospital  pavilions  in  which 
contagious  diseases  had  been  treated  for 
years.  Inasmuch  as  land  in  the  neighbor- 
hood has  steadily  advanced  in  value  and 
been  embellished  by  the  building  of  private 
houses,  churches,  stores  and  saloons,  it 
was  thought  that  the  objection  regarding 
the  value  of  real  estate  would  not  apply. 
But  the  same  cry  arose  again,  and  the  hos- 
pital is  still  unbuilt.  In  the  meantime,  the 
demands  upon  voluntary  charity  and  the 
burden  of  disease  to  the  sufferers  are 
increasing. 

Let  us  look  at  a  different  phase  of  the 
subject.  As  a  nation,  we  are  justly  proud 
of  the  development  of  our  industries,  of 
our  railroads,  and  of  our  machinery.  We 
encourage  them  by  law.  Certain  industries 
seem  so  important  that  we  lay  a  tax  on  the 

170 


SOCIAL  MYOPIA 

consumer  in  the  form  of  a  protective  tariff 
in  order  to  maintain  them.  Our  patent 
laws  encourage  inventions.  Our  corpora- 
tion laws  encourage  production  on  a  large 
scale  and  give  the  investing  capitalist  the 
benefit  of  a  limited  liability.  Our  railroads 
enjoy  the  right  of  taking  private  property 
for  their  uses,  and  often  of  using  the  pub- 
lic highways.  But  all  of  these  things  lead 
to  accidents,  and  many  of  them  to  disease. 
In  the  year  ending  June  30,  1911,  our 
railroads  killed  3,519  passengers  and  em- 
ployees, and  injured  60,235.  The  employ- 
ees naturally  bore  the  brunt  of  this ;  3,163 
of  them  were  killed  and  46,802  were  in- 
jured.^ Coal  mining  we  know  to  be  pecu- 
liarly dangerous.  In  1908,  2,450  coal  min- 
ers were  killed  and  6,722  injured  in  the 
United  States.  One  man  was  killed  for 
each  278  employed.  We  do  not  know  how 
many  persons  were  killed  in  all  of  the 
industries  of  the  United  States,  but  the 
State  of  New  York  has  gathered  figures  for 
accidents  in  factories,  quarries,  and  tunnel 
constructions,  and  in  the  single  year  1909 
there  were  15,437  accidents,  of  which  258 

2  Interstate  Commerce  Commission  Eeport  for  1911,  p. 

77. 

171 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

were  fatal  and  1,543  resulted  in  permanent 
injury.^  One  of  our  most  careful  statis- 
ticians estimates  the  number  of  fatal  acci- 
dents, among  occupied  males  in  the  United 
States,  as  between  30,000  and  35,000  in  a 
single  year,  and  thinks  that  half  of  these 
are  due  to  some  industry.*  That  this  rate 
is  terrible  is  obvious;  that  it  is  greater 
than  it  should  be,  is  seen  by  comparing  our 
figures  with  those  of  European  countries. 
For  instance,  in  the  United  Kingdom  in 
1904,  one  man  was  killed  on  the  railroads 
for  1,398  employed;  in  the  United  States, 
one  man  is  killed  for  385  employed.  In 
Great  Britain,  one  out  of  every  148  may 
expect  to  meet  with  some  accident;  in  the 
United  States,  one  out  of  every  30.  In  coal 
mining  the  accident  rate  is  more  than  twice 
as  great  as  in  the  principal  European  coun- 
tries. We  kill  one  man  for  every  278  em- 
ployed, while  in  Europe  one  for  every  724 
employed  is  killed.^    These  accidents  may 

3  Gilbert  Lewis  Campbell :  Industrial  Accidents  and 
their  Compensation,  1911,  pp,  9,  10. 

4  r.  L.  Hoffman :  Bull,  of  Bureau  of  Labor,  Washing- 
ton, Vol.  XVII,  1908,  p.  418. 

G  Campbell,  1.  c,  pp.  10,  14,  16  and  17.  The  coal  mining 
statistics  refer  for  five  European  States  to  the  year  1903, 
for  twenty-two  States  of  the  United  States  to  1908. 

172 


SOCIAL  MYOPIA 

be  fairly  said  to  be  the  outcome  of  indus- 
tries directly  encouraged  by  law.  They 
are  well  known.  It  would  seem  meet, 
therefore,  that  the  same  law  which  encour- 
ages the  accidents  should  do  something 
to  diminish  their  prevalence.  A  few  such 
laws  have  been  passed,  but  they  have  been 
very  slow  in  coming,  and  when  they  have 
finally  been  issued,  they  have,  in  a  large 
number  of  cases,  been  found  to  conflict 
with  the  higher  law  of  the  constitution. 
Even  when  they  have  been  sustained,  it 
has  cost  the  injured  person  much  time  and 
money  to  enforce  his  rights. 

In  1893,  Congress  enacted  a  law  requir- 
ing railroads  to  use,  among  other  safety 
appliances,  automatic  couplers.  On  Aug- 
ust 5,  1900,  a  brakeman  by  the  name  of 
Johnson  was  endeavoring  to  effect  a  coup- 
ling between  a  freight  engine  and  a  dining 
car,  standing  on  a  side  track,  and,  while 
doing  so,  had  his  hand  so  badly  crushed 
that  it  had  to  be  amputated  at  the  wrist. 
There  was  no  question  as  to  the  intention 
of  the  law  or  as  to  the  fact  that  the  man 
had  lost  his  hand.  But  there  was  a  very 
serious  question  as  to  whether  a  dining 
car  standing  on  a  side  track  was  engaged 

173 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

in  interstate  commerce,  and  until  this 
weighty  question  could  be  settled,  which 
took  until  December  10,  1904,  Johnson 
could  recover  no  damages  from  the  rail- 
road. Think  of  a  man  with  his  hand  ampu- 
tated, waiting  four  years  for  the  lawyers 
to  split  hairs  over  such  a  question!  This 
is  not  an  isolated  but  a  typical  case.® 

Another  question  occurs  in  connection 
with  accidents.  On  whom  shall  the  burden 
of  the  accident  fall?  An  accident,  by  its 
very  nature,  is  something  unexpected. 
The  individual  cannot  always  be  prepared 
for  it.  In  the  case  of  property,  insurance 
has  long  been  known  as  a  device  for 
spreading  over  a  large  group  of  interested 
persons  the  burden  of  the  loss  that  may 
come  from  fire,  explosion,  or  other  sudden 
disasters.  For  a  quarter  of  a  century,  peo- 
ple in  other  parts  of  the  world  have  begun 
to  realize  the  advantage,  not  merely  to  the 
individual,  but  to  the  community  as  a 
whole,  of  applying  the  same  principle  to 
accidents  to  workers,  and  have  introduced 
some  form  of  compulsory  workmen's  com- 
pensation, or  of  accident  insurance,  usu- 
ally carried  in  the  main  by  the  industry, 

6  Johnson  vs.  South.  Pac.  Co.,  196  U.  S.,  p.  2. 
174 


SOCIAL  MYOPIA 

or  group  of  industries  combined.  The 
principle  is  not  new  in  our  country,  as 
applied  to  sheep.  If  a  farmer's  sheep  are 
killed  by  a  dog,  the  selectmen  can  cause 
the  owner  of  the  dog  to  pay  damages,  or 
if  they  cannot  find  him,  compensate  the 
sheep's  owner  out  of  the  public  funds. 
Slowly  the  idea  has  gained  ground  in  our 
country  that  a  similar  principle  might 
well  be  applied  to  human  beings  and,  after 
much  discussion,  a  law  was  passed  by  the 
State  of  New  York  in  1910  designed  to 
provide  a  moderate  compensation  to  in- 
jured workers,  even  when  no  blame  could 
be  attached  to  the  employers.  The  act  was 
very  carefully  drawn,  with  a  full  knowl- 
edge of  the  constitutional  breakers  which 
lay  ahead  of  it.  It  applied  only  to  a  limited 
number  of  occupations  commonly  recog- 
nized as  extra-hazardous.  This  law  was 
declared  unconstitutional  by  a  decision  of 
the  New  York  Court  of  Appeals  handed 
down  March  24,  1911,  on  the  ground, 
among  others,  that  it  violates  the  XlVth 
amendment  to  the  Federal  Constitution. 

As  the  decision  was  unanimous,  it  must 
be  considered  good  law,  and  it  would  be 
foolish  for  a  layman  to  express  an  opinion 

175 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

on  the  legal  aspects  of  the  case.  But  when 
the  lawyer  speaks  of  good  law,  he  does  not 
mean  good  legislation,  still  less  good  sense, 
or  good  economics.  Now  the  economics  of 
the  decision  is  simply  this :  It  is  not  com- 
petent for  the  legislature  to  pass  a  law 
throwing  the  burden  of  an  accident  upon 
the  industry  in  which  it  arises,  and  requir- 
ing employers  to  treat  the  cost  of  medical 
attendance,  sick  allowance,  etc.,  as  they  do 
the  losses  by  fire  and  explosion.  There- 
fore, the  loss  must  fall  either  upon  the 
victim  himself  or,  if  he  has  insufficient 
means,  as  is  the  common  case,  upon  the 
charitable  public  or  the  taxpayer.  In  order 
that  an  obligation  shall  not  be  put  upon  an 
employer, ' '  who  has  committed  no  wrong, ' ' 
a  burden  is  laid  upon  those  who  have  not 
only  committed  no  wrong,  but  have  no  con- 
nection whatever  with  the  accident,  except- 
ing as  they  live  in  the  same  state.  Here 
is  another  case  of  the  endless  chain  of 
charity  work,  created  as  the  result  of  the 
application  of  constitutional  law. 

We  can  hardly  blame  the  courts  for  this 
situation,  since  they  are  but  following  the 
law  as  they  understand  it.  Nor  can  we 
blame  the  employers.    As  long  as  there  is 

176 


SOCIAL  MYOPIA 

any  reasonable  doubt  of  the  constitution- 
ality of  a  law,  they  are  morally  obliged  to 
subject  every  new  enactment  to  the  test  of 
a  lawsuit.  Moreover,  the  best  employers 
recognize  a  moral  obligation  far  beyond 
that  which  any  law  imposes  upon  them; 
and  in  the  whole  movement  for  a  more 
enlightened  policy,  they  have  borne  an 
active  and  important  part.  The  respon- 
sibility really  rests  with  the  people  them- 
selves, and  with  their  political  leaders. 
That  is  to  say,  it  falls  upon  us  all ;  because, 
rather  than  amend  our  constitutions  so 
that  they  will  clearly  state  what  they  mean, 
we  persist  in  subjecting  them  to  this  con- 
stant strain,  and  thus,  in  the  words  of  John 
Hays  Hammond,  have  developed  laws 
which,  ''to  put  it  mildly,  are  a  disgrace  to 
our  country.'" 

Custom  is  often  as  strong  as  law,  some- 
times even  stronger.  We  are  all  familiar 
with  the  tyranny  of  fashion.  Women  who 
would  be  too  squeamish  to  crush  a  fly  in 
their  hands,  will  demand  that  others  shall 
kill  birds,  even  to  the  extermination  of  a 
species,  to  embellish  their  hats,  if  fashion 

7  Address    in    Philadelphia,   April   8,   1911,   quoted  in 
New-Yorh  Tribune,  April  9,  1911. 

177 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

demands  it.  This  tyranny  of  habit  is  rec- 
ognized. It  has  often  been  the  cause  of 
injury  to  human  beings  as  well  as  to  birds, 
and  the  Consumers'  League  is  organized 
for  the  express  purpose  of  educating  con- 
sumers to  some  thought  for  those  who 
serve  them,  or  who  manufacture  the  goods 
that  they  use.  Yet  we  have  made  com- 
paratively little  progress  in  this  direction, 
and  habit  is  playing  its  part  in  the  endless 
chain  of  modern  charities. 

An  example  taken  from  recent  expe- 
rience will  illustrate  this  point.  It  is  well 
known  that  white  phosphorus,  commonly 
used  in  the  manufacture  of  matches,  is  a 
poison  which  is  liable  to  produce  the  ter- 
rible disease  of  phosphorus  necrosis  in 
the  workers.  It  has  also  caused  the  death 
of  many  children  who  have  ignorantly  put 
matches  into  their  mouths,  and  has  fre- 
quently been  used  for  criminal  purposes. 
Altogether,  it  is  a  poison  the  use  of  which 
for  many  reasons  it  is  desirable  to  limit 
and,  if  possible,  abolish.  In  Europe  it  has 
been  felt  to  be  so  dangerous  that  nine 
states  have  entered  into  an  international 
agreement  to  prohibit  white  phosphorus 
matches.    A  bill  aiming  to  accomplish  this 

178 


SOCIAL  MYOPIA 

same  purpose  by  a  prohibitory  tax  was 
introduced  into  the  Congress  of  the  United 
States  in  1910.  The  situation  was  pecu- 
liar in  that  this  bill  was  endorsed,  not  only 
by  the  Association  for  Labor  Legislation, 
which  caused  it  to  be  drafted,  and  by  the 
American  Federation  of  Labor,  represent- 
ing the  workers,  but  also  by  almost  all  of 
the  manufacturers  of  matches,  who  recog- 
nized the  danger  and  expressed  themselves 
as  quite  willing  to  submit  to  an  inconven- 
ience, or  even  an  increased  cost  of  produc- 
tion, provided  all  were  treated  ahke. 
When,  however,  the  members  of  Congress 
were  approached  upon  the  subject,  it  was 
discovered  that  the  bill  was  by  no  means 
sure  of  passage,  and  among  other  objec- 
tions one  prominently  mentioned  was  that 
the  consumers  would  not  be  satisfied  with 
the  substitutes.  I  procured  matches  made 
of  sesquisulphide  of  phosphorus,  which  is 
considered  to  be  one  of  the  best  substitutes 
for  poisonous  phosphorus,  and  undertook 
to  demonstrate  its  effectiveness  to  a  mem- 
ber of  Congress  by  showing  him  how  easy 
it  was  to  light  the  match,  not  only  on  a 
rough  surface,  but  even  on  a  piece  of  com- 
paratively smooth  paper.    He,  however,  at 


179 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

once  took  one  of  the  matches  and  applied  it 
to  the  seat  of  his  trousers.  It  did  not  ignite. 
He  had  shrewdly  detected  the  weak  point 
of  the  substitute,  and  also  the  strong  point 
of  the  opposition.  For  matches  are  used 
chiefly  by  smokers,  and  smokers,  it  seems, 
have  a  strong  preference  for  lighting 
matches  on  the  seats  of  their  trousers. 
While  the  sesquisulphide  match  will  light 
on  almost  any  surface,  and  indeed  can  be 
lighted  on  the  trousers  seat,  a  good  deal 
of  pressure  is  needed  to  secure  results. 
It  is  to  be  hoped  that  this  objection  may  be 
overcome.  Perhaps  the  tailors  will  gal- 
lantly come  to  the  rescue  of  the  girls  who 
make  matches  and  equip  the  seats  of  our 
trousers  with  a  suitably  roughened  sur- 
face. Perhaps  the  quality  of  the  match 
itself  may  be  improved.  Indeed,  this  has 
already  taken  place,  and  a  New  Jersey  fac- 
tory has  successfully  marketed  a  large 
quantity  of  the  non-poisonous  matches.  In 
the  meantime,  it  is  a  fact  that  the  objection 
mentioned  was  a  serious  obstacle  to  the 
legislation  in  question  and  helped  to  delay 
its  enactment  until  1912. 

This  is  not  the  only  contribution  made 
by  the  habits  of  smokers  to  the  endless 

180 


SOCIAL  MYOPIA 

chain.  We  have  not  yet,  I  hope,  forgotten 
the  terrible  fire  of  1911  in  New  York,  in 
which  145  workers  in  the  Triangle  shirt- 
waist factory  met  a  shocking  death.  Ac- 
cording to  statements  made  by  the  authori- 
ties who  investigated  it,  but  one  cause  of 
the  fire  was  discovered,  and  that  was  cigar- 
ette smoking;  yet  it  is  remarkable  that,  at 
least  in  the  newspapers  which  have  come 
to  the  attention  of  the  writer,  no  blame 
seems  to  be  attached  to  the  smokers,  but  all 
of  the  blame  is  thrown  upon  the  employ- 
ers and  the  builders.  Several  fires  have 
occurred  in  the  Yale  grandstand  at  the 
time  of  the  annual  football  game,  all  due 
to  the  habits  of  smokers,  and  panics  have 
been  avoided  only  by  vigilance  on  the  part 
of  the  watchmen.  But  here  again  no  one 
seemed  to  think  that  it  might  be  possible 
for  smokers  to  have  sufficient  regard  to 
the  rights  of  the  public  to  extinguish  their 
matches,  cigars,  and  cigarettes  before  they 
throw  them  down.  In  New  Haven  in  the 
single  year  1910  the  fire  department  was 
called  out  forty-nine  times  by  fires  clearly 
attributable  to  smokers,  apart  from  the 
large  number  caused  by  matches,  some  of 
which   were   doubtless   used   by   smokers. 

181 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

In  Massachusetts  111  forest  fires,  involv- 
ing a  loss  of  $33,000,  were  started  by  smok- 
ers in  1908,  and,  next  to  locomotive  sparks, 
tobacco  was  the  most  prolific  of  the  ascer- 
tained causes  of  forest  fires  in  that  State.^ 

Indeed,  our  custom  actually  raises  smok- 
ers to  the  position  of  a  privileged  class. 
They  are  the  only  people  who  can  get  two 
seats  in  a  drawing-room  car  by  paying  only 
one  fare;  and  for  their  sake  our  railroads 
must  supply  more  seating  room  than  they 
can  sell. 

Many  seem  to  consider  the  right  to 
smoke  anywhere  and  everywhere  one  of  the 
fundamental  rights  of  man.  A  city  legis- 
lator recently  asserted  his  right  to  smoke 
in   the   public   sessions   of  the   Board   of 

8  P.  W.  Eane :  We  Must  Stop  Forest  Fires  in  Massa- 
chusetts, 1909,  pp.  7-9.  Official  figures  regarding  forest 
fires  caused  by  smokers  are  inevitably  understatements,  on 
account  of  the  difficulty  of  obtaining  conclusive  evidence. 
Hence  in  a  large  number  of  cases  the  cause  is  put  down 
as  ' '  unknown. ' '  Referring  to  fires  caused  by  smokers, 
hunters,  etc.,  Mr.  Eane  says,  in  his  Seventh  Annual 
Report  as  State  Forester  of  Massachusetts :  ' '  There  is  no 
doubt  that  most  of  the  fires  labelled  'unknown'  would 
be  placed  in  this  column  if  they  could  be  traced  out ;  so 
that  we  feel  sure  that  they  cause  as  many  fires  as  the 
railroads,  and  are  more  dangerous,  because  the  smoke  is 
everywhere"  (pp.  47-48), 

182 


SOCIAL  MYOPIA 

Alderman.  A  New  York  newspaper  has 
called  attention  to  the  dangers  which  come 
from  cigarette  smoking  in  the  lobbies  of 
theaters,  not  on  the  part  of  red  Indians  but 
on  the  part  of  men  who  carry  gold  cigar- 
ette cases.  With  such  examples,  can  we 
wonder  that  shirtwaist  cutters  consider  it 
one  of  the  rights  of  American  citizens  to 
smoke  when  at  work,  and  that  our  smoking 
habits  make  no  small  contribution  to  the 
endless  chain  of  accidents  and  hospital 
cases! 

'^0  God,  that  men  should  put  an  enemy 
in  their  mouths  to  steal  away  their 
brains!"  The  robber  alcohol  is  familiar 
to  us  all,  but  we  do  not  always  realize  the 
extent  of  his  robberies.  Some  years  ago 
a  committee  of  fifty  was  formed  for  the 
express  purpose  of  studying  the  liquor 
problem  in  its  various  aspects.  One  of  its 
sub-committees  made  a  study  of  its  eco- 
nomic aspects.  With  the  aid  of  a  large 
number  of  societies,  prison  wardens,  and 
other  persons,  it  tried  to  find  out  how  many 
persons  had  committed  crime  or  had  fallen 
into  dependence  as  the  direct  or  indirect 
result  of  the  use  of  alcohol. 

The  investigation   was   made   with   the 

183 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

greatest  care  by  a  study  of  individual 
cases,  and  was  nothing  if  not  conservative. 
Yet  it  appeared  that,  of  the  poverty  com- 
ing within  the  field  of  charity  organiza- 
tion societies,  25  per  cent  could  be  traced 
directly  or  indirectly  to  liquor,  while  in 
almshouses  37  per  cent  was  so  traced  and 
not  less  than  45  per  cent  of  the  destitution 
of  children  in  institutions  was  due  to  the 
liquor  habits  either  of  the  parents,  guar- 
dians, or  others.^  In  the  case  of  crime,  a 
distinction  was  made  between  primary  and 
secondary  causes,  and  while  in  31  per  cent 
of  the  convicts  investigated,  liquor  was 
found  to  be  the  primary  cause,  it  figured  as 
a  cause  more  or  less  important  in  nearly  50 
per  cent/°  There  is  no  doubt  of  the 
ravishes  of  this  thief,  who  not  only  steals 
away  our  brains,  but  robs  wives  and  chil- 
dren of  their  support,  and  fills  our  prisons 
and  almshouses.  I  am  well  aware  of  the 
difficulty  of  dealing  with  this  question. 
The  very  magnitude  of  the  liquor  interest 
makes  it  a  powerful  political  agency  which 
it  is  not  easy  to  overcome.    And  yet  in  Con- 

9  John  Koren :   Economic  Aspects  of  the  Liquor  Prob- 
lem, Honghton,  Mifflin  and  Company,  1899,  pp.  21,  22. 

10  1.  c,  p.  30, 

184 


SOCIAL  MYOPIA 


necticut  we  put  the  control  of  this  danger- 
ous traffic  into  the  hands  of  a  small  body  of 
persons,  who  are  so  appointed  that  they 
have  no  direct  responsibility  either  to  the 
electors  or  to  any  single  administrative 
officer,  and  who  are  practically  exempt 
from  the  ordinary  checks  and  balances  of 
a  republican  form  of  government.  We 
need  not  wonder  that  a  law  limiting  the 
number  of  saloons  can  remain  a  dead  let- 
ter, and  that  it  is  not  possible  to  make 
anyone  responsible  for  its  enforcement. 

The  hospital  for  the  confinement  and 
treatment  of  contagious  diseases  must  wait 
years  for  its  realization,  but  establish- 
ments for  the  distribution  of  liquor  hold 
what  is  virtually  a  position  of  privilege.  Is 
not  the  community  as  a  whole  contributing 
through  this  policy  to  maintain  the  endless 
chain  of  poverty  and  distress? 

In  calling  attention  to  these  evils,  I  dis- 
claim the  intention  of  attacking  any  person 
or  group  of  persons.  The  citizens  as  a 
whole,  and,  I  do  not  hesitate  to  say,  more 
particularly  the  property  owning  classes, 
are  responsible  for  a  system  which  creates 
constantly  new  demands  upon  their  char- 
ity. Like  an  inexperienced  bicyclist  breast- 

185 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

ing  his  first  hill,  who  pushes  with  both  feet 
at  once,  we  create  with  one  hand  the  evils 
which  the  other  is  trjdng  to  remedy.  We 
are  so  anxious  for  gain  that  we  do  not 
realize  what  it  costs  us  to  conduct  our  busi- 
ness. The  same  gold  "gilds  the  straight- 
ened forehead"  of  us  all. 

These  illustrations,  which  do  not  begin 
to  exhaust  the  subject,  are  intended  to 
show  that,  while  much  of  the  distress  and 
the  evil  that  charity  tries  to  relieve  is  due 
to  human  nature,  heredity,  and  other 
causes,  which  are  very  difficult  to  reach, 
much  of  the  work  that  it  is  called  upon  to 
do  is  the  direct  result  of  institutions,  laws 
or  customs  maintained  mth  a  short-sight- 
edness that  would  be  incredible,  were  we 
not  so  inured  to  it  that  we  are  hardly  con- 
scious of  any  defect  in  our  social  vision. 
But  as  long  as  an  ounce  of  prevention  is 
worth  a  pound  of  cure,  and  as  long  as  it 
is  kinder  to  prevent  a  person  from  falling 
into  a  ditch  than  to  pull  him  out  after  he 
is  in,  so  long  will  our  work  be  incomplete, 
and  indeed  futile,  unless  we  realize  that  the 
Good  Samaritan  must  at  the  same  time 
be  a  good  citizen. 


186 


CHAPTER  XII 

Signs  of  a  Better  Social  Vision 

To  provide  altruism  with  social  specta- 
cles means  a  great  deal.  It  means  that  the 
effective  charity  worker  will  not  content 
himself  with  the  customary  methods  of 
relieving  distress.  He  must  sometimes 
suppress  the  impulses  of  his  heart,  if  he 
knows  that  he  is  liable  to  do  harm  by 
yielding  to  them.  He  must  also  take  such 
part  in  securing  legislation,  in  influencing 
administration  and  policy,  and  in  helping 
to  guide  public  opinion,  that  the  causes  of 
poverty  and  sickness  will  be  undermined. 
Fortunately  we  are  already  seeing  evi- 
dence of  sporadic  individual  efforts  made 
in  the  direction  indicated.  What  is  needed 
is  to  co-ordinate  them,  help  them  to  pull 
together,  make  them  conscious  of  each 
other;  in  short,  we  want  more  team  play. 
A  few  illustrations  will  make  this  clear. 

Not  only  accidents  but  many  diseases 
are  caused  by  certain  industries.  We  are 
just  beginning  the  study  of  these  matters. 
Italy  has  established,  in  the  city  of  Milan, 

187 


THE  ECONOMIC  UTILIZATIOTT  OF  HISTOEY 

a  special  hospital  for  the  treatment  and 
study  of  industrial  diseases  with  the  aim 
of  diminishing  them.  This  is  a  branch  of 
what  is  called  preventive  medicine.  It 
points  the  way  to  the  future,  and  I  have  no 
doubt  that  our  country  will  soon  learn  the 
lesson  that  Italy  and  other  countries  are 
teaching  us,  and  apply  it  to  our  conditions. 
Still  other  diseases  are  due,  as  we  know, 
to  the  conditions  of  living  in  our  large 
cities.  This  is  particularly  the  case  with 
regard  to  tuberculosis.  Some  years  ago  a 
student  in  the  Yale  Medical  School  made 
a  map  of  New  Haven,  showing  the  cases 
of  consumption  by  means  of  red  dots,  and 
the  map  showed  such  an  eruption  of  this 
rash  in  certain  streets  and  houses,  that 
those  who  were  responsible  for  the 
study  did  not  dare  to  have  it  published. 
We  are  slowly  awakening  to  the  im- 
portance of  air  and  light.  The  Anti- 
Tuberculosis  Association  does  not  content 
itself  with  treating  cases,  but  aims  to  edu- 
cate the  public  through  its  graduates.  We 
have  but  one  tenement  law  on  the  statute 
books  of  Connecticut,  but  there  is  a  move- 
ment to  make  this  law  more  stringent,  and 
the  organization,  in  1910,  of  a  National 

188 


SIGNS  OF  A  BETTER  SOCIAL  VISION 

Housing  Association  is  calculated  to  give 
intelligent  direction  to  the  movement  for 
better  housing  conditions  which  is  growing 
up  all  over  the  country. 

The  psychical  and  social  causes  of  dis- 
ease are  at  last  being  recognized.  Under 
the  leadership  of  the  Massachusetts  Gen- 
eral Hospital  Society,  a  number  of  our 
hospitals,  including  the  New  Haven  Hos- 
pital, have  added  a  social  feature  to  their 
Avork.  We  are  now  realizing  that  it  is  not 
enough  to  give  the  patient  medical  treat- 
ment ;  we  must  also  try  to  reach  the  social 
causes  of  disease.  Modern  medical  schools 
now  have  chairs  of  preventive  medicine. 
The  professor  who  was  called  upon  to  fill 
that  chair  in  the  new  medical  school  of  St. 
Louis  prepared  himself  for  his  work  by 
studying,  not  merely  chemistry,  physiol- 
ogy, and  anatomy,  but  by  examining  our 
factories  and  our  tenements,  and  consult- 
ing with  economists  and  sociologists. 

An  illustration  of  the  importance  of  eco- 
nomic considerations  in  the  profession  of 
medicine  was  brought  out  recently  by  Dr. 
Lyman  of  the  Gaylord  Farm  Sanatorium. 
Looking  at  the  matter  from  the  strictly 
medical  point  of  view,  a  patient  recovering 

189 


THE  ECONOMIC  UTILIZATION  OF  HISTOKY 

from  tuberculosis  should  live  an  out-of- 
door  life,  and  take  up  some  occupation 
which  secures  this.  An  actual  study  of 
cases  has  shown,  however,  that  in  general 
those  patients  maintain  their  improvement 
best  who  go  back  to  their  old  occupations, 
not  because  these  are  medically  desirable, 
but  because  they  furnish  a  better  support 
and  are  better  adapted  as  a  rule  to  the 
abilities  of  the  patients  than  are  out-of- 
door  occupations,  which  usually  involve 
undue  exertion  or  great  physical  strength. 

New  forms  of  public  activity  are  being 
developed.  The  social  settlements,  the 
Consumers'  Leagues,  the  George  Junior 
Eepublics,  the  Society  for  Mental  Hygiene, 
the  visiting  nurses  and  housekeepers,  the 
Boy  Scouts,  are  examples  of  efforts  made, 
not  to  exercise,  but  to  forestall  charity. 

Even  our  nomenclature  is  changing.  The 
expression  ''social  service"  is  supplanting 
the  word  "charity."  The  magazine  for- 
merly known  as  Charities  is  now  called 
The  Survey,  and  it  was  under  its  direction 
that  the  remarkable  study  of  industrial 
conditions,  known  as  the  ' '  Pittsburgh  Sur- 
vey," was  made  a  few  years  ago.  People 
who  msh  to  go  into  social  work  are  now 

190 


SIGNS  OF  A  BETTER  SOCIAL  VISION 

receiving  training  in  special  schools,  some- 
times called  schools  of  philanthropy,  but 
more  appropriately,  as  in  the  case  of  the 
Chicago  school,  named  schools  of  civics  and 
philanthropy.  Science  and  charity  are  no 
longer  strangers,  but  are  working  hand  in 
hand. 

In  short,  we  are  beginning  to  realize,  in 
the  words  of  Dr.  Cabot,  that,  "Science 
without  humanity  becomes  arid  and, 
finally,  discouraged.  Humanity  without 
science  becomes  scrappy  and  shallow.'" 

We  thus  need  to  unite  all  of  the  agencies, 
whether  philanthropic,  scientific,  or  civic, 
whose  activity  may  diminish  or  relieve  dis- 
tress. The  suggestion,  made  by  Mr.  Kel- 
logg at  the  Connecticut  Conference  of 
Charities  and  Correction  held  in  1910,  that 
we  should  have  more  charity  organization 
societies  in  Connecticut,  is  worthy  of  seri- 
ous consideration.  We  not  only  need  more 
societies,  but  we  need  to  organize  them  on 
a  broader  basis,  and  to  have  a  greater  co- 
ordination between  those  in  different  cities. 
A  preliminary  step  toward  such  a  broader 
understanding  lies  in  a  knowledge  of  the 

1  Richard  Clarke  Cabot :  Social  Service  and  the  Art  of 
Healing,  1909,  pp.  30,  31. 

191 


THE  ECONOMIC  UTILIZATION  OF  HISTOEY 

facts.  It  is  strange  that,  although  so  many 
people  are  interested  in  these  subjects,  and 
so  much  money  is  annually  contributed,  no 
one  has  more  than  a  very  vague  knowledge 
as  to  the  total  amount  which  is  spent, 
either  in  the  State  or  in  any  one  city  of 
the  State,  during  a  given  year.  As  a  step 
toward  supplying  this  need,  and  at  the 
same  time  emphasizing  its  existence,  the 
Organized  Charities  Association  of  New 
Haven  has  attempted  a  directory  of  local 
societies,  and  a  summary  of  their  financial 
condition.  It  is  not  complete,  and  abso- 
lute accuracy  in  such  matters  is  perhaps 
unobtainable,  but  it  is  hoped  that  it  will  at 
least  give  some  facts  of  general  interest 
and  stimulate  other  societies  to  follow  our 
example.  It  is  significant  that  this  piece 
of  work  was  planned  by  the  directors  of 
the  society  and  executed  by  a  divinity  stu- 
dent under  the  direction  of  a  professor  of 
political  economy. 

Some  people  are  afraid  that  organiza- 
tion will  make  charity  too  mechanical  and 
impersonal.  There  is  danger  of  fossiliza- 
tion  in  any  form  of  public  service,  but  it  is 
not  greater  in  the  new  era,  which  I  believe 
to  be  dawning,  than  it  has  been  in  the  past. 

192 


SIGNS  OF  A  BETTER  SOCIAL  VISION 

Could  anything  be  less  personal  than  drop- 
ping a  copper  into  the  hat  of  a  beggar? 
This  form  of  charity  is  as  mechanical  as  is 
the  ^'wheezer"  hand  organ,  whose  doleful 
notes  are  studiously  designed  by  the  nianu- 
facturer  to  work  upon  the  sympathies  of 
the  passer-by.  The  new  charity  makes 
greater  demands  upon  the  individual,  be- 
cause it  requires  thought  and  work  as  well 
as  sympathy  and  doles.  It  demands  a 
social  imagination  strong  enough  to  appre- 
hend not  only  what  we  see  with  our  eyes, 
but  what  we  do  not  see.  It  requires  us  to 
look  at  future  as  well  as  at  immediate 
results.  It  is  optimistic  because  it  hopes, 
not  without  good  reason,  to  be  able  to 
diminish  as  well  as  relieve  distress.  It 
demands  the  co-operation  of  many  profes- 
sions. It  enlists  in  its  campaign  the  law- 
giver, the  engineer,  the  physician,  the  econ- 
omist, the  statistician.  It  is  substituting 
the  trained  expert  for  the  amateur.  It  is 
insisting  that  philanthropy  shall  be  far- 
sighted  as  well  as  kind.  It  even  expects 
that  this  far-sightedness  will  in  the  future 
influence  our  business  activities,  as  well  as 
conventional  charity. 


193 


INDEX 

Abbe,  Ernst,  birth  and  education,  139;  founds  Carl- 
Zeiss-Stiftung,  142;  Gesammelte  A'b'handlung,:n, 
138;  life  shortened  by  overwork,  162;  member 
of  board  of  Zeiss-Werk,  146;  on  eight-hour  day, 
157;  on  profit-sharing,  154;  on  relations  of  em- 
ployees to  establishment,  146,  147;  principle  of 
trieder  binocular  applied  by,  141. 

Acatallactic,  definition  of 123 

Accidents,  burden  of,  95,  174-176;  caused  by  indus- 
tries, 187;  compensation  for,  70,  71;  compulsory 
insurance  for,  134;  deaths  from  industrial,  in 
Pittsburgh,  102;  encouraged  by  law,  173;  in  coal 
mines  in  U.  S.,  171 ;  in  New  York  State,  in  fac- 
tories, quarries  and  tunnel  construction,  171; 
insurance  against,  70 ;  need  for  fuller  records  of, 
99,  111;  new  causes  of,  70;  number  of,  in  U.  S. 
compared  with  Europe  and  Great  Britain,  172; 
on  railroads  in  U.  S.,  171;  preventable,  3,  73; 
problem  of  labor  legislation  to  diminish,  70; 
social  causes  of,  3;  treaty  for  compensation  for, 
71. 

Administration,  experimentation  through 38 

Aerial  navigation 66 

Agricultural  experiment  stations   65 

Agriculture,  application  of  science  to,  64,  65; 
methods  of,  42;  schools  of,  65. 

Aimes,  Hubert  H.  S 133 

Alaska,  98 ;  instructiveness  of  history  of,  48,  49. 
Alcohol,   crimes   committed   as  result   of,  183,   184; 
poverty  caused  by  use  of,  183,  184. 

Allison  Act   1^ 

Altruism,  needs  social  spectacles,  187;  spirit  of,  165. 

195 


INDEX 

American  Association  for  Labor  Legislation,  82,  119, 
121;  advocates  reporting  of  industrial  diseases 
and  accidents.  111;  and  lobbying,  119;  drafts 
phosphorus  bill,  179;  study  of  administration  of 
labor  laws  by,  117. 

American  Economic  Association 51 

American  Federation  of  Labor,  endorses  phosphorus 

bill    179 

American  Historical  Association 53 

American  History,  Turner 's  Social  Forces  in 53 

American  Industrial  Society,  Documentary  History  of     51 

Amonn,  Alfred   29,  30 

Anarchist,  philosophical   48 

Annuities,  distribution  of  wealth  by 124 

Anti-Trust  Law  15 

Anti-Tuberculosis  Association  188 

Anthracite  coal  strike 19 

Arbitration,  compulsory,  85,  135;  voluntary,  85. 

Aristotle    23 

Artificial  selection  60 

Associations,  co-operative 85 

Astronomy  and  deduction  10,  11 

Auerbach,  Felix  138 

Australia,  wage  boards  and  compulsory  arbitration 

systems  in  135 

Automatic  couplers,  law  requiring,  on  railroads  ....   173 

Babcock  tester   127 

Bargaining,  collective,  joint  boards  for,  85 ;  new 
machinery  necessary  for,  69. 

Bellamy  Clubs    38 

Benefit  societies,  85;  in  Switzerland,  113. 

Bimetallic  theory   14,  15 

Blackstone,  on  requisites  to  good  government,  104; 
opinion  of  British  Parliament,  104. 

Books,  property  right  in,  enforced  by  law 127 

Boy  Scouts   190 

196 


INDEX 

British  Association  for  Advancement  of  Science.  ...     26 
Brodsky,   E.   J.,   insurance  in  fraternal  and  benefit 

societies   113 

Brook  Farm   38 

Brooks,  Eobert  C 16 

Budgets,  of  clubmen,  48  ;  family,  23 ;  of  workingmen     48 

Buffalo,  adaptation  of,  to  environment   58,  59 

Business,  artificial  stability  of,  created   71 

Cabot,  Dr.  Eichard  Clarke,  "Social  Service  and  Art 

of    Healing"    191 

Campbell,  Lewis  Gilbert,  on  industrial  accidents   .  .  .    172 

Canada    37 

Capital,  benefited  by  changes  in  organization,  71; 
government  intervention  to  save  deterioration 
of  human,  71;  increase  in,  68,  69;  law  putting 
new  responsibilities  upon,  71 ;  legal  privileges  of, 
24;  legal  restrictions  on,  24. 

Capital  contract,  forms  of 130-132 

Carl-Zeiss-Stiftung,  see  Zeiss-Stiftung. 
Carnegie,  Andrew,  163;  on  hereditary  wealth,  45. 

Carnegie  Institute  101 

Carnegie  Institution  of  Washington 11,  50,  65 

Caste  system 78 

Changes,  in  consumers'  wants,  68,  71,  72;  in  methods 
of  organization,  68,  71 ;  in  methods  of  produc- 
tion, 68,  70,  71. 

Charities    190 

Charities,  directory  of,  in  New  Haven   192. 

Charity,  177-186;  condition  under  which  it  is 
carried  on,  167,  168;  demands  of  new,  193; 
examples  of  efforts  to  forestall,  190;  fear  that 
organization  will  make  impersonal,  192,  193; 
ignorance  of  amount  spent  on,  192;  private,  63; 
team  work  needed  in,  187;  working  hand  in  hand 
with  science,  191. 
Charity  worker,  the  effective 187 

197 


INDEX 

Chicago  school  of  civics  and  philanthropy 191 

Children,  argument  for  protecting,  94;  destitution  of, 
caused  by  liquor  habits  of  parents,  184;  effects 
of  machinery  upon,  70;  lack  of  adequate  laws 
for  protection  of,  98,  107;  law  limiting  age  of 
employment  of,  84,  88;  law  limiting  hours  of 
employment  of,  84,  88;  playgrounds  for,  97; 
views  of  Alexander  Hamilton  on  labor  of,  79. 

China    26 

Cigarette  smoking,  cause  of  Triangle  shirtwaist  fire, 
181 ;  in  lobbies  of  theatres,  183. 

City  and  Suburban  Homes  Company 126 

Civilization,    by-products    of,    63;    effects    of,    upon 

nature,  58,  59;  hunting  stage  of,  60. 
Civilized    man    and    struggle    for    supremacy    over 

nature  58-60 

Civics,   schools   of    191 

Civil  Service  examination  for  factory  inspectors  ....   117 

Clark,  J.  Maurice   39 

Clark,  Prof.   John  Bates,  on  elements  of  economic 

progress    68-72 

Coal  mining,  accidents  in  the  U.  S.  in 171 

Coartacion     133 

Collective    bargaining    69,  85 

Collectivism     96 

Colonies,  British,  compared  with  the  U.  S 37 

Commission,  President's  Anthracite  Coal,  20;  expert  100 
Committee  of  Fifty  on  the  Liquor  Problem  .  .9,  183,  184 

Committee  on  Public  Health 106 

Common  law,  re-enacted  in  Massachusetts 114 

Commons,  Prof.  John  E 51 

Compensation,  workmen 's,  see  workmen 's  compensa- 
tion. 
Competition,  free,  considered  as  a  cure  for  the  abuses 

of  trade,  15;  limitation  of,  135. 
Compromise  of  1850  36 

198 


INDEX 

Compulsory  arbitration   85,  135 

Compulsory  insurance,  90,  108;  in  Germany,  79,  92, 
134;  laws  regarding,  84;  of  sick  in  Zeiss- 
Stiftung,  147,  149;  see  also  workmen's  insurance. 

Concomitant  variations,  method  of 5,  6    13 

Connecticut,  Conference  of  Charities  and  Correction, 
191;  control  of  liquor  traffic  in,  185;  inexperi- 
ence of  legislators  in,  105;  isolation  hospital  in 
city  in,  169,  170;  tenement  house  law  of,  188. 

Conquest,  law  of   62 

Conservation,  97;  labor  legislation  part  of  move- 
ment for,  80,  81 ;  societies  relating  to,  39. 
Constitution,  Federal,  77,  103 ;  laws  to  diminish  acci- 
dents found  to  conflict  with,  173;  New  York 
State  Workmen's  Compensation  act  violates 
XlVth  amendment  of,  175,  176. 

Constitutions,  amendment  of  109,  177 

Consumers'  Leagues,  190;  purpose  of,  178. 

Consumers'  wants,  changes  in 68,  71,  72 

Contract,  capital,  forms  of,  130-132;  labor,  62;  labor, 
in  Zeiss- Stiftung,  149,  150;  law  of,  62;  legal 
form  of,  influences  machinery  of  production, 
130-137;  terms  read  into,  by  law,  134;  wage,  85, 
132-135. 

Co-operation,  productive 136 

Co-operative  associations   85 

Corporation    laws,    encourage    production    on    large 

scale   171 

Corporations,    public    service,    39;    records    of,    50; 

regulation  of,    36. 
Courts,  power  of,  to  nullify  laws  interrupts  experi- 
mentation in  U.  S 49 

Crimes,  due  to  alcohol  183,  184 

Cross,  Prof.  Ira  B 39 

Currency 36,  42 

Custom,  often  as  strong  as  law 177 

199 


INDEX 

Czapski,  Siegfried  138,  142,  162 

Davenport,  Dr.  C.  B 46 

Decadence,  national    48 

Deduction   10,  12 

Deductive  school    18 

Deficiencies  of  nature 25 

Degeneracy,  human  25 

Description,  contrasted  with  science 53-54 

Dewey,  Prof.  Davis  K.,  presidential  address  of 51 

Diminishing  returns,  law  of   24 

Discoveries,  eagerness  with  which  pursued,  66;  readi- 
ness to  use,  as  basis  of  property  rights,  66; 
tendency  to  anticipate,  65,  66. 

Disease,  economic  25,  26 

Diseases,  attempt  to  reach  social  causes  of,  189; 
caused  by  conditions  of  living  in  cities,  188,  189 ; 
hospital  for  industrial,  in  Milan,  112,  187,  188; 
industrial,  70;  lack  of  information  regarding 
industrial,  99;  national  investigation  of  indus- 
trial, urged  by  American  Association  for  Labor 
Legislation,  111;  preventable,  73;  psychical  and 
social  causes  of,  189;  study  of  industrial,  187, 
188. 
Distribution  of  wealth,  24;  by  gift,  124;  by  graft, 
125;  by  law,  124;  by  marriage,  124;  by  will, 
124;  not  as  simple  as  was  once  assumed,  122; 
without  reference  to  law  of  supply  and  demand, 
123-126. 
Distributive  or  positive  labor  legislation,  84,  85,  89-91 
Documentary  History  of  American  Industrial  Society     51 

Documents,  State  economic,  index  of 50 

Domestication,  stage  of  60 

Drafting,  necessity  for  careful,  in  legislation,  115; 

society  for,  116. 
Dynamic  society,  Clark's  elements  of 68-72 

200 


INDEX 

Economic  conditions,  retard  good  legislation   100 

Economic  experimentation,  advantages  of  the  U.  S. 
for,  34-42;  contrasted  with  observation,  13;  dis- 
advantage of  economist  in,  49 ;  ethical  difficulties 
of,  1-4,  13;  favorable  conditions  for,  in  U.  S., 
37-42;  fields  of,  42-49;  hindered  by  inadequate 
records,  50-52;  interfered  with  in  the  U.  S.  by 
the  courts,  49 ;  John  Stuart  Mill  on,  5-7 ;  logical 
objections  to,  4-6;  objections  to,  discussed,  6-10; 
referred  to  by  Ely,  Keynes,  and  von  Schmoller, 
27;  referred  to  by  Newniarch  and  Jevons,  26; 
through  legislation  and  administration,  38 ;  tried 
in  self-interest,  39;  views  of  economists  regard- 
ing, discussed,  28-31;  wage  receivers  and,  40. 

Economic  forces,  operation  of 53 

Economic  history  40 

Economic  ideal  of  U.  S 77-80 

Economic  interests,  34;  and  political  questions,  36. 
Economic   interpretation  of  history  contrasted  with 

economic  utilization  of  history 52 

Economic  laboratory,  conception  of  history  as 52 

Economic    laws     23,  28,  29 

Economic  material,  33 ;  buried  in  state  archives,  50. 

Economic  pathology    25,  26,  48 

Economic  phenomena,  analysis  of 24 

Economic  processes,  influenced  by  legal  or  institu- 
tional   factors    124 

Economic  progress,  Clark's  elements  of,  68-72; 
involves  labor  legislation,  73;  spirit  of,  64. 

Economic  questions  in  the  history  of  the  U.  S 36 

Economic  reactions,  study  of  46,  47 

Economic  results  of  laws,  importance  of  recording.  .      52 
Economic  science,  Jevons'  contribution  to,  28;  scien- 
tific management  applied  to,  32;  two  phases  of, 
55,  56. 
Economic  system,  pathologic  state  of 25 

201 


INDEX 

Economic  theory,  Professor  Ely 's  views  on 82 

Economic  utilization  of  history  contrasted  with  eco- 
nomic interpretation  of  history 52 

Economies,  laws  of,  52;  of  decision  against  New 
York  State  workmen's  compensation  law,  176. 

Economist,  disadvantages  of,  in  experimentation,  49; 
qualities  needed  by,  56 ;  task  of,  22. 

Economists,  Italian,  31;  point  of  view  of,  contrasted 
with  that  of  historians,  53;  reliance  of  Federal 
and  State  governments  upon  trained,  51;  theories 
of,  and  economic  experiments,  15. 

Ehrich,  Louis  E 96 

Eight-hour  day,  in  Zeiss-Stiftung 156,  157 

Ely,  Prof.  Eichard  T.,  27;  on  relation  of  labor  legis- 
lation to  economic  theory,  82. 

Employers '  liability  laws,  84 ;  recognize  moral  obliga- 
tions, 177;  relation  of,  to  employed  weakened, 
69. 

Endless  chain  of  charity,  contribution  of  alcohol  to, 
183,  184;  contribution  of  habit  to,  177-186;  con- 
tribution of  habits  of  smokers  to,  178-183; 
created  as  result  of  application  of  constitutional 
law,  176;  responsibility  for,  177,  185. 

Engel  's  law    23 

England,  37;  average  duration  of  life  in,  72;  experi- 
ence in  posteritism  in,  97;  forms  of  wage  con- 
tracts in,  133. 

Eugenics,  97;  not  yet  an  exact  science,  73. 

Europe,  experience  in  posteritism,  97;  history  of, 
compared  with  U.  S.,  34,  35;  number  of  accidents 
in,  compared  with  U.  S.,  172;  under  compulsory 
insurance  laws,  134. 

Evils,  connected  with  efforts  to  improve  social  insti- 
tutions, 61-63;  due  to  changes  in  methods  of 
production,  70 ;  of  progress,  legislation  necessary 
to  prevent,  68. 

202 


INDEX 

Exchange,  terms  of,  affected  by  distributive  legisla- 
tion       85 

Experiment  station,  advantage  of  U.  S.  as 37 

Experimental  evolution,  laboratory  of   11 

Experimental  method,  see  economic  experimenta.'on. 

Explorations,  polar,  and  the  press 65,  66 

Factories,  accidents  in,  in  New  York 171 

Factory  inspectors,  Prussian  requirements  for,  117, 

118;  qualifications  for,  116,  117. 
Factory  system,  70;  advocated  by  Alexander  Hamil- 
ton, 79. 

Fairview  Colony  of  Single  Taxers 38 

Family  budgets   23 

Fashion,  tyranny  of 177    178 

Favors,  distribution  of  wealth  by  special 125 

Federal    Constitution    77,  103,  173,  175,  176 

Feudal  system 77,  78 

Fires  caused  by  smokers   181 

Fischer,  Dr 120 

Fischer,  Max 142 

Fisher,  Prof.  Irving 30,  73 

Forces  prominent  in  European  history 34 

Forest  fires  in  Massachusetts  caused  by  smokers  . . .   182 

Forests,  measures  for  preserving 97 

France,  labor  unions  in,  92;  treaty  for  compensation 
for  accidents  between  Great  Britain  and,  71. 

Free  competition,  and  the  Anti-Trust  law 15 

Free  passes  on  railroads 125 

Freehold,  preferred  in  New  England  to  feudal  land 

tenures     35 

Fugitive  Slave  Law   36 

Galileo   54 

Galton,   Sir   Francis    46 

Gaylord  Farm  Sanatorium    189 

George  Junior  Eepublic   190 

German  historical  school   12,  27-30 

203 


INDEX 

Germany,  compulsory  insurance  in,  92,  134,  147 ; 
compulsory  sick  insurance  in,  79;  historical 
school  of,  12,  27-30;  labor  unions  in,  92;  rail- 
roads of,  compared  with  those  of  U.  S.,  128; 
system  of  old  age  insurance  in,  114. 
Ghent,  system  of  insurance  against  unemployment  in     92 

Gide  and  Eist    30 

Gifts,  distribution  of  wealth  by 124 

Good  Samaritan,  parable  of,  165;   sequel  to  parable 

of,  166,  167;  should  be  a  good  citizen,  186. 
Government,  intervention  of,  to  save  deterioration  of 

human  capital 71 

Graft,  a  cause  of  unequal  distribution  of  wealth  ....   125 

Gratuities    133 

Great  Britain,  number  of  accidents  in,  compared  with 
those  in  U.  S.,  172;  treaty  for  compensation  for 
accidents  between  France  and,  71. 
Gresham's  law,  analogy  of,  applied  to  labor  problems     86 
Guernsey,    prosperity    of    island    of,    attributed    to 

rente    131,  132 

Giilt    132 

Habit,  contribution  of,  to  endless  chain  177-186 

Hale,  Dr.  George  E 11 

Hamilton,  Alexander,  views  of,  on  chUd  labor 79 

Hammond,  John  Hays  177 

Harris   tweeds    61 

Hereditary  wealth,  Andrew  Carnegie  on 45 

Heredity     12,  31,  45,  46 

Herod 1-3 

Heterogeneity  of  people  of  U.  S 41 

Historians,  point  of  view  of,  contrasted  with  that  of 

economists  53 

Historical  Association,  American 53 

Historical  facts,  scientific  value  of 32 

Historical  laws 23 

Historical  method   29 

204 


INDEX 

Historical  school,  German   12,  27-30 

Historiometry   31 

History,  conception  of,  as  economic  laboratory,  52; 
dynamic  period  of  world's,  64;  economic,  40,  54; 
economic  interpretation  of,  contrasted  with  eco- 
nomic utilization  of,  52;  law  of,  52;  social 
forces  in  American,  53. 
History,     Documentary,     of     American     Industrial 

Society  51 

Hoffman,  Dr.  F.  L.,  accident  statistics 172 

Homestead  exemption  laws  78 

Horn,  General  von 94 

Hospital,  for  industrial  diseases  in  Milan,  112,  187, 

188;    isolation    in    Connecticut,    169,    170,    185; 

Massachusetts  General,  112,  189;  U.  S.  compared 

to  a,  37. 

Hours  of  labor,  in  Zeiss-Stiftung,  148,  155-158;  laws 

imiting,  of  children,  84,  88. 
Housing  conditions,  movement  for  better,  189;  tuber- 
culosis caused  by  unsanitary,  188. 

Human  life,  average  duration  of  72 

Human  scrap  heap   102 

Ideal,  economic,  of  U.  S 77-80 

Idleness,  voluntary   48 

Imagination,  scientific,  23 ;  social,  166. 

Immigration     36,  69 

Incidence  of  taxation   24 

Income,  surplus   24 

Increment,  unearned,  taxation  of 16 

Indentured   labor    43,  132 

Index  of  State  economic  documents 50 

Individualism,  not  the  only  antithesis  to  socialism,  95,  96 
Industrial  accidents,  see  accidents. 
Industrial  diseases,  see  diseases. 

Industrial  organization,  new  forms  of   39 

Industrial  poisons,  list  of 120 

205 


INDEX 

Insurance,  accident,  70,  134;  compulsory,  84,  90,  92, 
108,  134,  147,  149;  in  benefit  societies  in  the 
U.  S.,  113;  in  Germany,  79,  114,  134,  147;  in 
Zeiss- Stiftung,  147,  149,  150;  invalidity,  134; 
investigation  of,  in  New  York,  125;  of  aerial 
risks,  66;  of  old  age  in  Germany,  114;  of  sick  in 
merchant  marine  of  U.  S.,  79 ;  of  sick  in  Switzer- 
land, 113;  unemployment,  92;  workmen's,  70. 
Interest,  affected  by  law  or  custom,  123 ;  rate  of,  42 ; 

rate  of,  in  Wall  Street,  126. 
Interests,  economic,  34;  and  political  questions,  36. 
International  Association  for  Labor  Legislation,  71 ; 
application  of  practical  principles  by,  119,  120; 
Bulletin  of,  120. 

International  treaties   71 

Interpretation,   economic,   contrasted  with   economic 

utilization  of  history 52 

Intestacy    35,  36 

Invalidity,  compulsory  insurance  against 134 

Inventions,  encouraged  by  patent  laws,  171;  policy 
of  Zeiss- Stiftung  regarding,  158,  159;  property 
right  in,  127. 
Investigations,  Committee  of  Fifty,  on  Liquor  Prob- 
lem, 183,  184;  New  York  insurance,  125;  Sage 
Foundation,  of  salary  loan  business,  126. 

Irrigation    80,  81,  97 

Italy,  hospital  for  industrial  diseases  in   ..112,  187,  188 
Jena,  University  of,  145,  164;  confers  degree  on  Carl 
Zeiss,  142;  gifts  of  Zeiss-Stiftung  to,  159,  160. 

Jevons,  W.   Stanley    15,  16,  26-28,  37 

Johnson  vs.  Southern  Pacific  Eailroad  Company,  173,  174 

Kellogg,  Charles  P 191 

Keynes,  John  Neville  27,  28,  30 

Kiao  Chau    16 

Knies,  Karl 29 

206 


INDEX 

Labor,  application  of  free,  43 ;  child,  88 ;  effect  of, 
on  production,  44;  experiments  in  efficiency  of, 
43;  hours  of,  in  Zeiss-Stiftung,  155-157;  inden- 
tured, 43,  132;  legal  status  of,  24;  methods  of 
applying,  to  land,  43 ;  new  standard  of,  created, 
88;  organization  of,  36;  problems  affecting,  GS; 
reaction  of  wealth  upon  efficiency  of,  44;  skilled, 
70. 

Labor  contract,  62;  forms  of,  132-134;  in  Zeiss- 
Stiftung,  149,  150. 

Labor  laws,  administration  of,  117;  lien,  134; 
"master  and  servant,"  obsolete  expression  in, 
69;  necessity  for  recording  operation  of,  118; 
number  passed  in  U.  S.  in  1907,  98;  Prussian 
child,  94. 

Labor  legislation,  aims  to  distribute  wealth,  95 ;  aims 
to  preserve  race,  94;  American  Association  for, 
see  American,  etc.;  analogy  to  monetary  legisla- 
tion, 86-92;  classes  of,  83-93;  conservation  and, 
80,  81;  consistency  given  to,  79,  80;  distributive 
or  positive,  84,  85,  89-91;  economic  progress 
involves,  73;  grouped  as  socialistic,  95;  history 
of,  shows  dangers  in  distributive  legislation,  90; 
International  Association  for,  see  International, 
etc. ;  interstate  and  international  needed,  71 ;  less 
frequently  expressive  of  class  feeling,  76;  neces- 
sary to  prevent  evils  of  progress,  68;  necessity 
of  careful  investigation  of  facts  in,  111;  number 
of  laws  passed  in  1907  in  U.  S.,  98;  permissive, 
85,  86,  91,  92;  problems  of,  70,  71;  promptness 
of,  75;  protective,  84,  86-89,  94,  97;  purpose  of, 
94;  recognition  of,  as  permanent  feature,  76, 
77;  requisites  of,  111;  societies  relating  to,  39; 
subject  for  international  treaties,  99 ;  uniformity 
of,  76;  views  of  Professor  Ely  on  relation  of, 
to  economic  theory,  82. 

207 


INDEX 

Labor  organizations,  laws  regulating 85 

Labor  problems   43 

Labor  unions,  91,  92;  records  of,  50, 

Labor  welfare,  Zeiss-Stiftung  and 158 

Laboratory,  economic,  conception  of  history  as  ...  .     52 

Laboratory  methods    49 

Laborers,  premature  death  of 103 

Laissez  faire,  83;  argument  for,  110;  doctrine  of,  83. 
Land,  methods  of  applying  labor  to,  43 ;  public  policy 

of  U.  S.  in  regard  to,  78. 
Land  tenure,  24,  42 ;  societies  relating  to,  39. 
Lands,  public,  36 ;  policy  of  TJ.  S.  in  regard  to,  78. 
Law,  affecting  economic  relations,  51,  52 ;  Anti-Trust, 
15;   common,  re-enacted  in  Massachusetts,  114; 
distribution   of   wealth  by,    124;    endless   chain 
created  as  result  of  application  of  constitutional, 
176;   Fugitive  Slave,  36;   immutability  of,  74; 
limiting  number  of  saloons  a  dead  letter,  185 ; 
made    for    man,    110;    New   York    State    work- 
men's  compensation,    declared  unconstitutional, 
175,  176;   of  conquest,  62;   of  contract,  62;   of 
diminishing   returns,   24;    of   pendulum,   54;    of 
supply  and  demand,  operation  of,  limited  by  non- 
economic  forces,   126-136;   putting  new  respon- 
sibilities upon  capital,   71;  tenement  house,  in 
Connecticut,  188;  terms  read  into  contracts  by, 
134. 
Law  schools,  science  of  legislation  absent  from  cur- 
ricula of    105 

Laws,  administration  of,  98,  117;  compensation,  in 
conflict  with  constitution,  173,  175,  176;  com- 
pulsory insurance,  90;  corporation,  encourage 
production,  171;  early,  economic  ideals  of,  35; 
economic,  23,  28,  29,  52;  employers'  liability, 
84;  examples  of  distributive  or  positive,  84-86; 
examples  c  f  permissive,  85,  91 ;  examples  of  pro- 

208 


INDEX 

teetive,  84,  88;  historical,  23;  homestead  exemp- 
tion, 78;  importance  of  recording  economic 
results  of,  52;  labor  lien,  134;  lack  of,  for  pro- 
tection of  women  and  children,  98,  107 ;  limiting 
age  and  hours  of  employment,  84,  88 ;  mone*"ar7 
circulation,  86,  87;  more  uniform  needed,  IQ; 
of  Medes  and  Persians,  why  immutable,  74; 
patent,  127,  171 ;  power  of  courts  to  nullify, 
interrupts  experimentation,  49 ;  provision  for  exe- 
cution of,  116;  scientific,  22,  23;  statistical,  23; 
study  of  operation  of  past,  83;  tenement  house, 
69,  188. 
Legislation,  American  Association  for  Labor,  see 
American,  etc;  compared  to  surgery,  110;  eco- 
nomic conditions  retard  good,  100;  effects  of 
careless,  107;  experimental,  28;  experimentation 
through,  38 ;  hampered  by  constitution,  108,  173, 
175,  176;  lobbying  for,  119;  necessary  to  prevent 
evils  of  progress,  68 ;  necessity  for  careful  draft- 
ing of,  115;  necessity  for  study  of  pre-existing, 
114;  need  for,  in  case  of  overexertion  and  unem- 
ployment, 72;  product  of  unskilled  labor,  106; 
provision  for  execution  of,  116;  restrictive,  the 
condition  of  economic  freedom,  81;  social,  28; 
see  also  labor  legislation. 

Legislative  Keference  Library  of  Wisconsin 100 

Legislators,  lack  of  training  of,  in  U.  S.   .  .  .99,  100,  105 
Legislatures,    need    economic    annex    for    recording 

results  of  laws  52 

Leisure  class  47 

Lex  Ehodia  de  jactu 108 

Life,  average  duration  of  human 72 

Liquor,   crimes   committed   as   result   of,    183,    184; 

poverty  caused  by  use  of,  184. 
Liquor  interest,  powerful  political  agency   184 

209 


INDEX 

Liquor  problem,  Committee  of  Fifty  on,  9,  183,  184; 
economic  aspects  of,  183, 

Liquor  traffic,  control  of,  in  Connecticut 185 

Lobbying     119 

' '  Looking  Backwards, ' '  Bellamy 's 38 

Lugano,    meeting    of   International   Association    for 

Labor  Legislation  in 120 

Lyman,  Dr.,  on  employment  of  discharged  tubercular 

patients    189,  190 

MeCall,  Hon.  Samuel  W.,  and  experimental  legisla- 
tion in  Oregon  28 

Machinery,  effects  of   70 

Man,    civilized,    and    struggle    for    supremacy    over 
nature,  58-60;   dealings  of,  with  fellowmen,  60. 
Management,  scientific,  applied  to  economic  science     32 

Marine  Hospital  Service  78,  79 

Marriage,  distribution  of  wealth  by 124 

Massachusetts,   Body  of   Liberties,  35;    forest  fires 

caused  by  smokers  in,   182;    General  Hospital, 

social    service    department    of,    112,    189;    law 

limiting  price  of  stocks  in,  129. 

"Master  and  servant"  now  an  obsolete  expression 

in  labor  laws   69 

Matches,  non-poisonous  marketed  by  New  Jersey  fac- 
tory, 180;  white  phosphorus,  178-180. 

Material,  economic,  buried  in  State  archives 50 

Medical  examination  in  Zeiss- Stiftung 148 

Medical  school,  of  St.  Louis,  chair  of  preventive  medi- 
cine in,  189 ;  Yale,  188. 

Medical  science,  social  side  of 112 

Medical  sociology,  formation  of  society  for  study  of  112 
Medicine,  economic  considerations  in,   189;    preven- 
tive, 188,  189;  tendency  of  science  of,  8. 

Mental  Hygiene,  Society  for   190 

Method,  experimental  in  economics,  25,  32;  historical     29 

210 


INDEX 

Methods,  laboratory,  49;  of  agriculture,  42,  43;  of 
organization,  changes  in,  68,  71 ;  of  production, 
changes  in,  68,  70,  71;  of  remuneration,  43. 

Migration,  laws  limiting   84 

Milan,  hospital  for  industrial  diseases  in  .  .112,  187,  188 
Mill,  John  Stuart,  on  deduction,  10;  on  experimeiita- 
tion,  5-7;  on  unearned  increment,  16. 

Missouri  Compromise   36 

Monetary  legislation,  analogy  of,  to  labor  legisla- 
tion     86-92 

Money,  experience  of  world  in  dealing  with,  86,  87; 
loaning  of,  to  employees  by  Zeiss- Stiftung,  158. 

Moore,  Prof.  H.  L.,  "Laws  of  Wages" 30,  31 

Mores,  of  the  people,  40;  of  time  and  country,  77,  78. 

Mormons    38 

Mount  Wilson  Observatory 11 

Muhammad,  son  of  Tuglak 2,  4 

National  Housing  Association,  organization  of,  188,  189 

Natural  resources,  exhaustion  of 25 

Natural  sciences  10,  12 

Natural  selection  60 

Nature,  civilized  man  and,  58-60;  deficiencies  of,  25; 

in  state  of  equilibrium,  58. 
Necrosis,  phosphorus,  15 ;  international  treaty  to  pre- 
vent, 178;  legislation  against,  in  U.  S.,  179,  180. 
New  England,  34;   freehold  in,  35;   rule  of  primo- 
geniture abandoned  in,  35. 

New  Harmony  community 38 

New    Haven,    directory   of   local    charities    in,    192; 
fires  caused  by  smokers  in,   181;   map  showing 
cases  of  tuberculosis  in,  188. 
New   Haven   Organized   Charities  Association,  local 

directory  of  charities  made  by 192 

New    Jersey,    non-poisonous    matches    marketed    by 

factory    in    180 

Newmarch,  William   26,  28 

211 


INDEX 

New  York,  accidents  m  factories,  quarries,  and  tunnel 
constructions  in,  171 ;  investigation  of  insurance 
in,  125;  Triangle  shirtwaist  fire,  responsibility 
for,  181;  workmen's  compensation  law  declared 
unconstitutional  in,  175,  176. 

New  Zealand,  compulsory  arbitration  in 135 

Observation  in  economics 12 

Old  age  insurance,  German  114 

Old  age  pensions,  in  Great  Britain,  114;  introduced 
into  Zeiss- Stiftung,  147;  laws,  84. 

Opportunity,  equality  of   "^8 

Organization,  changes  in  methods  of,  68,  71;  indus- 
trial, new  forms  of,  39;  of  labor,  36. 

Organizations,  labor,  laws  regulating 85 

Organized  Charities  Association  of  New  Haven,  direc- 
tory of  local  charities  by 192 

Parasitism  in  ' '  leisure  class  "   45,  47,  48 

Parliament,  British,  Blackstone's  opinion  of,  104; 
old  age  pension  act  and,  114. 

Past,  records  of  the   53 

Patent  laws,  encourage  inventions 171 

Patents,  policy  of  Zeiss- Stiftung  regarding 158,  159 

Paternalism     l^^ 

Pathology,    economic    25,  26,  48 

Pearson,  Karl 19)  22,  32 

Pendulum,  law  of   ^^ 

Pensions,  old  age,  Great  Britain,  114;  laws  regard- 
ing, 84;  Zeiss-Stiftung,  147,  150. 

Peonage     43,  62,  132 

People,  heterogeneity  of,  41;  responsibility  rests 
with,  for  endless  chain  of  charity,  177. 

Perfectionists  2° 

Permissive  labor  legislation  85,  86,  91,  92 

Phenomena,  analysis  of 24 

Philanthropy,  schools  of 191 

212 


INDEX 

Phosphorus,  law  prohibiting  use  of,  in  U.  S.  delayed 

by  habits  of  smokers 178-180 

Phosphorus  bill 16,  179 

Phosphorus  necrosis  15,  178 

Pierstoff,  Julius 138 

Pioneers  of  frontier,  compared  to  those  of  industry     61 

Pisa,  lamp  in  cathedral  of   54 

Pittsburgh  Survey,  exhibit  of,  100-102;  made  under 

direction  of  The  Survey,  190. 

Place,  Francis    14 

Playgrounds    97 

Poisons,  industrial,  list  of 120 

Polar  explorations  and  the  press   65,  66 

Policy,  public  land,  of  U.  S 78 

Poor  relief,  lavish,  danger  of,  91 ;  experience  of  Great 

Britain  with,  114,  115. 

Political  questions,  and  economic  interests 36 

Population,  immigrant,  169;  improvement  in  quality 

of,  72,  73;  increase  in,  68,  69;  Eicardo's  theory 

of  increase  of,  44. 

Posteritism 96,  103 

Poverty,  caused  by  use  of  alcohol  183,  184 

Prejudice,  racial   35 

Preservation  of  race   94 

Preventable  disease 73 

Preventive  medicine,  188,  189;  chair  of,  in  St.  Louis 

Medical  School,  189. 
Primogeniture,  rule  of,  abandoned  in  New  England     35 
Processes,   economic,  influenced  by  legal  or   institu- 
tional factors,  124;  mathematical,  30. 
Production,  24 ;   changes  in  methods  of,  68,  70,  71 ; 

depends  upon  legal  form  of  contract,  130-137; 

effect  of  labor  on,  44 ;  encouraged  by  corporation 

laws,  171. 
Profit  sharing,  136;  in  Zeiss-Stiftung,  153,  154. 
Profits,  limited  by  public  opinion  or  law 127-129 

213 


INDEX 

Progress,    economic,    Clark's    elements    of,    68-72; 

involves  labor  legislation,  73;  spirit  of,  64. 
Prohibitory  tax  to  prevent  use  of  white  phosphorus  179 
Property  rights,  in  inventions,  127;  readiness  to  use 
discovery  as  basis  of,  66. 

Protective  labor  legislation 84,  86-89,  94,  97 

Protective  tariff,  90,  171 ;  Alexander  Hamilton  and, 
79;  Mill  and,  5-7;  wealth  of  nations  and,  6,  10. 
Prussia,  child  labor  laws  of,  94;    qualifications  for 
factory  inspectors  in,  117,  118. 

Public,  restriction  of  profits  in  interest  of 128,  129 

Public  Health,  Committee  on,  in  Conn 106 

Public  lands  of  U.  S 36,  78 

Public  poor  relief 63 

QuintUian    115 

Eace,  liberty  of,  78;  purpose  of  labor  legislation  to 

maintain  quality  of,  94. 
Eaces,  materials  bearing  upon  mixture  of,  in  U.  S., 
48 ;  wars  of,  35. 

Eacial  prejudice 35 

Eailroads,  accidents  on,  in  U.  S.,  171;  aesthetic  obli- 
gations of,  127,  128;  enjoy  right  of  eminent 
domain,  171 ;  in  IT.  S.  compared  with  those  in 
Germany  and  Switzerland,  128;  law  enacted 
requiring  automatic  couplers  on,  173. 

Eane,  F.  W 182 

Eeactions,  economic,  study  of   46,  47 

Eecords,  imperfection  of,  51;  inadequacy  of,  50;  of 
operation  of  laws,  necessity  for,  52. 

Eegulation  of  Corporations 36 

Eeligion,  wars  of 34 

Eemuneration,  methods  of 43 

Eent,  affected  by  form  of  law,  123;  determination 
of,  126. 

Rente,  in  Guernsey 131,  132 

Eicardo,  David 44 

214 


INDEX 

Eist,  Charles 30 

Koosevelt,  Theodore   58,  59 

Roscher,  Wilhelm 29 

Ruskin  Colony    38 

Safety  appliances,  laws  requiring  84 

Sage   Foundation,   65;    investigation   of   salary  loan 

business  by,  126. 
St.  Louis  Medical  School,  chair  of  preventive  medi- 
cine in   189 

Salaries,  of  officials  of  Zeiss- Stiftung 159 

Samaritan,  Good,  and  the  good  citizen,  186;  parable 
of,  165;  sequel  to  parable  of,  166,  167. 

Savings,  compulsory    92 

Schloss,  David   133 

SehmoUer,  Gustav  von 18,  27,  30 

Schomerus,  Dr.  Fr 138,  161 

School,   Chicago,   of   civics   and  philanthropy,    191 ; 

St,  Louis  Medical,  189;  Yale  Medical,  188. 
Schools,   law,    105;    of   agriculture,    65;    of    philan- 
thropy, 191. 

Schott,  Dr.   Otto    140 

Schumpeter,  J 22 

Science,  application  of,  to  agriculture,  64,  65;  con- 
trasted with  description,  53-54;  "dismal,"  55; 
economic,  Jevon  's  contribution  to,  28 ;  economic, 
two  phases  of,  55,  56 ;  of  legislation,  conspicuous 
by  its  absence  from  curricula  of  law  schools, 
105;  working  hand  in  hand  with  charity,  191. 
Sciences,  co-operation  between,  112;  natural,  10,  12. 

Scientific  economist,  aim  of  21,  22 

Scientific  imagination  23 

Scientific  laws   22,  23 

Scientific  management,  applied  to  economic  science     32 
Scientific  method,  see  economic  experimentation. 

Scrap   heap,   human    102 

Selection,  artificial,  60 ;  natural,  60. 

215 


INDEX 

Serfdom 132 

Sesquisulphide  of  phosphorus 179 

Shakers    38 

Sherman  Act 14 

Sick  insurance,   in  Germany,  79,   134;    in  merchant 
marine  in  U.   S.,   79;   in   Switzerland,   113;    in 
Zeiss-Stiftung,  147,  149,  150. 
Sickness,  compulsory  insurance  against   . . .  134,  147,  149 

SUver   14 

Single  Taxers,  Fairview  Colony  of 38 

Slavery,  36,  43,  62,  63 ;  forms  of,  132,  133. 

Smith,  Adam   15 

Smokers,  cause  of  forest  fires  in  Massachusetts,  182; 
contributions  to  endless  chain  of  charity  by, 
180-183;  fires  caused  in  New  Haven  by,  181; 
fires  in  Yale  grandstand  caused  by,  181;  raised 
to  position  of  privileged  class,  182,  183;  respon- 
sible for  Triangle  shirtwaist  fire,  181. 

Social  imagination,  demanded  by  new  charity 166 

Social  organism  19 

Social  policy,  experiments  in 28 

Social  service  supplanting  charity 190 

Social  Utopias   38 

Socialism,  95,  96,  103;  advocated  as  remedy,  63,  64; 
among   employees   in  Zeiss-Stiftung,   162,    163; 
argument  for,  47. 
Societies,  benefit,  85;  to  promote  reform,  39. 

Soil,  exhaustion  of   25 

Somerfeld,  Prof.  Th 120 

Southern  Pacific  Eailroad  Company  vs.  Johnson  173,  174 

Spaniards  and  coartacidn    133 

Special  favors,  distribution  of  wealth  by 125 

Spoils  system   98 

State,  intervention  of,  in  labor,  89;  necessary,  73. 
Statistical  laws    23 

216 


INDEX 

Statistics,  imperfection  of  vital  and  accident,  111 ; 
vital,  registration  of,  99. 

Stiftungs-V erwaltung ,  of  Zeiss- Stiftung 145,  153 

Strike,  anthracite  coal   19 

Stimson,  F.  J 114 

Straubel,  Eudolf    142 

Struggle  for  existence,  civilized  man  and 60 

Supply  and  demand,  law  of,  limited  by  public  opinion 
or  law,  127-129;  not  affecting  distribution  of 
wealth,  123-125. 

Surplus  income    24 

Survey,  The,  Pittsburgh  Survey  made  under  direc- 
tion of   190 

Sweden,  average  duration  of  life  in  72 

Switzerland,  Civil  Code  of,  provides  for  CHilt,  132; 
investigation  of  sick  insurance  in,  113;  railroads 
of,  compared  with  those  of  the  U.  S.,  128. 

Talcott,  Governor    36 

Tariff   duties    126 

Tax,  prohibitory,  on  poisonous  matches   109 

Taxation,  43 ;  incidence  of,  24. 

Taximeter,  a  means  of  avoiding  disputes 135 

Taylor,  Frederick  W 44 

Team  work,  need  of,  31;  in  charity  work,  187. 

Tenancy,   free    43 

Tenement  house  laws,  69;  in  Connecticut,  188. 

Trade   Unions    14,  20,  43,  75 

Treaties,  international,  71;  legislation  a  subject  for, 
99. 

Triangle  shirtwaist  fire,  responsibility  for 181 

Tuberculosis,  97,  168;    deaths  from,  in  Pittsburgh, 

102;  due  to  conditions  of  living  in  large  cities, 

188;    employment  of  patients  recovering  from, 

190;  map  showing  cases  of,  in  New  Haven,  188, 

Tunnel  constructions,  accidents  in  New  York  State 

in    171 

217 


INDEX 

Turner,  Frederic  J 53 

Typhoid  fever,  deaths  from,  in  Pittsburgh 101 

Unconstitutionality,  bugaboo  of 108 

Unearned  increment,  taxation  of 16 

Unemployment,  insurance  against,  92;   statistics  of 

involuntary,  48. 
United  States,  accidents  in  coal  mines  in,  171; 
advantage  of,  as  an  experiment  station,  37;  as  a 
legislative  problem,  98;  average  duration  of  life 
in,  72;  backwardness  of  law-making  in,  100; 
common  basis  of  English  language  and  law  in, 
41;  compared  with  British  colonies,  37;  com- 
pared to  hospital,  37;  difficulties  in  movement 
for  posteritism  in,  97-102;  disregard  of  human 
scrap  heap  in,  102;  economic  ideal  of,  77-80; 
experimentation  interrupted  in,  49;  hetero- 
geneity of  people  in,  41;  history  of  economic 
experimentation  in,  42;  history  of,  compared 
with  Europe,  34,  35;  labor  unions  in,  92; 
marine  hospital  insurance  in,  78,  79;  number 
insured  in  fraternal  and  benefit  societies  in,  113; 
number  of  accidents  on  railroads  in,  171,  172; 
number  of  fatal  accidents  in,  172;  public  land 
policy  of,  78;  railroads  in,  compared  with  those 
of  Germany  and  Switzerland,  128;  untrained 
legislators  in,  99,  100,  105. 

United  States  Steel  Corporation   164 

Utopias,  social,  in  the  U.  S 38 

Visiting  nurses    190 

Vital  statistics,  registration  of 99 

Wage  boards    135 

Wage  contract  85,  132-135 

Wage  receivers,  and  experimentation   40 

Wage  system,  forms  of  contract  of 133 

Wages,   affected   by  form   of  law   or   custom,    123; 
fixing   of,  by  wage   boards,   85;    influenced   by 

218 


INDEX 

other  factors  than  law  of  supply  and  demand, 
129,  130;  in  Zeiss- Stiftung,  149;  "Laws  of," 
31;  observation  of  Mr,  Taylor  on,  44;  rates  of, 
43;  Eicardo  and,  44;  systems  of,  43. 

Wants,   changes   in   consumers'    68,  71,  72 

Wars  of  race,  35;  of  religion,  34. 
Wealth,  distribution  of,  24,  62;  distribution  of,  with- 
out reference  to  law  of  supply  and  demand,  123- 
127;  hereditary,  45;  increase  in  capital  tends  to 
make  large  aggregations  of,  69 ;  irresponsibility 
of,  in  U.  S.,  47;  reaction  of,  upon  efficiency  of 
labor,  44;  transfer  of,  by  law,  91,  124. 

Wealthy  families,  parasitic  members  of   45,  47,  48 

Whateley,  Eichard,  definition  of  catallactic 123 

Wills,  distribution  of  wealth  by 124 

Winkelmann,  A 138 

Wisconsin  Legislative  Eeference  Library 100 

Women,  argument  for  protecting,  94;  failure  to  pro- 
tect, 107;  lack  of  adequate  laws  for  protection 
of,  98 ;  laws  limiting  hours  of  employment  of, 
84. 
Woods,  Frederick  Adams,  31,  46;  on  vices  of  aris- 
tocracy, 45. 
Worker,  displacement  of  skilled,  by  unskilled,  70; 
sick  or  superannuated,  63. 

Workingmen,  budgets  of  48 

Workmen's  compensation,  108,  174-176;  a  problem  of 
labor  legislation,  70;  economics  of  decision 
against  New  York  State  law  on,  176;  New 
York  State  law  declared  unconstitutional,  175, 
176;  principle  of,  174,  175;  treaty  for,  71. 
Workmen's  insurance,  70,  90;  arguments  for,  94; 
compulsory,  108,  134;  compulsory,  for  carrying 
burden  of  accidents,  134,  174-176;  see  also 
insurance. 
Yale  Medical  School 188 

219 


INDEX 

Zeiss,  Carl,  birth  and  education,  138;  death  of,  142; 
establishment  of  business,  138,  139;  growth  of 
business,  141;  interest  of,  in  Schott  und  Genos- 
sen,  140. 

Zeiss-Stiftung,  complicated  nature  of,  143;  condi- 
tions of  ownership  of,  143,  144;  criticisms  of, 
162;  employees  appointed  without  reference  to 
race,  etc.,  148;  founding  of,  142;  general  sum- 
mary of  results  of,  160,  161;  gifts  to  University 
of  Jena  and  for  public  purposes  by,  159,  160; 
guarantees  minimum  weekly  compensation,  148; 
holidays,  148;  hours  of  labor  in,  148,  155-157; 
indemnity  to  discharged  employees  of,  150,  151 ; 
insurance  features  of,  147,  149;  interest  and  sig- 
nificance of,  163,  164;  leave  of  absence  for  ser- 
vice of  Empire  or  state  granted  to  employees, 
148;  medical  examination  of  juvenile  workers, 
148;  notice  to  be  given  before  leaving  works, 
150;  organization  of,  and  management  of,  145, 
146;  patents,  158,  159;  pensions,  150;  profit 
sharing  with  employees,  153,  154;  profits  set 
aside  for  interests  of  industry  or  science,  153; 
purposes  of,  144;  relations  of  employees  of,  to 
establishment,  146,  147;  reserve  fund  of,  152; 
salaries  of  officials  of,  159;  savings  bank  of, 
148;  sick  fund  of,  149;  socialists  among  work- 
men in,  162,  163;  Stiftungs-Verwaltung  of,  145, 
153;  strikes  in,  161;  under  ultimate  control  of 
government,  145;  Vorstdnde  of,  145;  wages  of, 
149;  welfare  work  of,  158. 


220 


F22e     Farnam  - 

The  economic 


utilization  of  history! 


T^^. 


UCSUUTHFRf,  Rl 


W  FACILITY 


AA    000  546  584    4 


HB71 
F22e 


